Maersk shares surge 8% amid unexpected profit
Maersk boosts investor returns amid uncertain freight market
A.P. Moller-Maersk's stock surged 8% after announcing a $2 billion share buyback program and a dividend payout of DKK 1,120 per share (10% yield).
Key Takeaways
- Maersk announced a $2 billion share buyback and a dividend of DKK 1,120 per share, boosting investor confidence despite financial challenges ahead.
- The company projects EBITDA of $6 billion to $9 billion in 2025, with a potential $3 billion negative free cash flow, largely depending on Red Sea trade route developments.
- Loaded freight rates exceeded expectations by 13%, driving strong Ocean segment results, but Logistics & Services margins declined slightly, raising concerns among analysts.
Share Buyback and Dividend Drive Stock Surge
A.P. Moller-Maersk’s announcement of a $2 billion share buyback program, coupled with a generous dividend payout of DKK 1,120 per share, sparked an 8% surge in its stock price, reports Investing.com.
The move was seen as a strong signal of shareholder-friendly capital allocation, boosting investor confidence despite broader concerns about the company’s future financial health. Market participants welcomed the substantial cash return as a positive development, particularly in an uncertain macroeconomic environment.
2025 Guidance Signals Weak Earnings and Cash Flow Risks
Maersk’s financial outlook for 2025 projects EBITDA between $6 billion and $9 billion, slightly above the consensus estimate of $6.6 billion. However, the company expects at least $3 billion in negative free cash flow.
AP Moeller-Maersk AS (AMKBY) share price dynamics (Jul 2023 - Feb 2025) Source: Investing.com
The forecast is highly dependent on the situation in the Red Sea, with the lower end assuming a mid-year reopening of trade routes and the upper bound accounting for prolonged disruption through year-end.
Freight Rates and Logistics Margins Under Scrutiny
In 2024, Maersk saw a 24% year-over-year revenue increase, outperforming analyst expectations by 12%. The Ocean segment was a key driver, with EBITDA soaring over 300%, helped by loaded freight rates that came in 13% above forecasts.
However, the Logistics & Services division saw EBIT margins decline by 1 percentage point in Q4 due to one-off costs in Last Mile services. While Maersk maintains a 6% EBIT margin target for this segment in 2025, analysts from Morgan Stanley expressed concerns over its recent underperformance.
Maersk’s stock rally was fueled by its aggressive buyback and dividend announcement, but its weak earnings outlook and cash flow concerns leave analysts wary. The company’s performance in 2025 will largely depend on trade route stability and market conditions in the shipping sector.
Additionally, Burberry’s third-quarter trading statement revealed stronger-than-expected results, leading to a more than 15% jump in its share price.
