AP Møller-Maersk on Wednesday warned of growing economic risks, including potential stagflation and Chinese factory closures, even as the container shipping giant reported a record quarter.
Søren Skou, Maersk’s chief executive, told the Financial Times that the current second quarter was developing very much in line with the first three months, which brought the highest profits in the Danish group’s 114-year history.
But he added: “We are assuming a slowdown in the second half, a normalisation. The visibility is quite low. Mainly we see risks building up in the economy, in China with the Covid-19 policy where they use these very hard lockdowns, some downgrades due to a very high oil price.”
Maersk, which transports more than one in every six containers carried by sea, is seen as a bellwether for global trade. It last week downgraded its forecast of growth in the shipping industry this year to a potential small fall.
It also upgraded its profit forecast for this year to $24bn of underlying operating profit, up from its February estimate of $19bn. “The momentum we have right now is sufficient to make our upgrade,” Skou said on Wednesday.
Nevertheless, Skou noted that some economists were forecasting a recession in the US around the end of the year although it was “too early” to say.
“There are quite a number of factors that suggest we will see less growth in the second half and into next year,” he said, pointing to declining consumer and business confidence in Europe and the US as well as falling Chinese export orders.
Maersk was suffering from declining volumes because of a “mind-blowing” sixth week of lockdowns in Shanghai, Skou said. It had not yet been dramatic, however.
The company’s post-tax profits for the first quarter were $6.78bn, against $2.7bn for the same quarter of 2021.