• Tue. Mar 28th, 2023

World’s greatest container teams defend bumper dividends


Mar 18, 2023

The world’s two greatest publicly listed container transport firms have defended plans to dish out multibillion-dollar payouts to shareholders, regardless of the specter of falling earnings and strain over low tax charges.

Danish group AP Møller-Maersk and German rival Hapag-Lloyd plan a mixed $22.6bn dividend payout, greater than 33 occasions the quantity delivered in 2019.

Though the bumper payouts observe a file interval for earnings, earnings are anticipated to fall sharply this yr as international commerce declines due to the financial slowdown.

Each teams have forecast a roughly 70 per cent fall in earnings for 2023, with their mixed payout predicted to be not less than 30 per cent increased than earnings this yr.

Service earnings have risen largely due to surging demand for on-line buying in the course of the top of the Covid-19 pandemic, in addition to provide chain bottlenecks that despatched the price of delivering items by sea hovering.

Maersk mentioned its proposed dividend was equal to 37.5 per cent of its underlying earnings for 2022, including that this was “absolutely in line” with its coverage of paying between 30 and 50 per cent of earnings.

Column chart of  ($bn) showing Maersk’s dividend payouts have surged as profits rose

Hapag-Lloyd’s chief monetary officer Mark Frese, justifying the group’s deliberate €11.1bn dividend this month, insisted that the group nonetheless anticipated to keep up a internet money place.

The payouts come amid criticism of the comparatively low tax charges the trade enjoys due to the best way the levies are calculated.

Final yr a gaggle of French lawmakers proposed a 25 per cent tax on the “superprofits” amassed by home service CMA CGM, privately owned by the billionaire Saadé household.

The calls by the lawmakers have resonance given oil majors ExxonMobil and Shell, which have been hit laborious by windfall taxes, are forecast to pay out a mixed $23.3bn this yr, solely a fraction above the mixed dividends of Maersk and Hapag-Lloyd.

EU nations allowed transport firms to be taxed on fleet capability to cease them relocating to low-tax states. However this meant that as their earnings soared, their efficient tax price plunged.

In 2022, Hapag-Lloyd’s tax funds had been equal to simply 1 per cent of its pre-tax earnings in contrast with 10 per cent in 2019. Maersk’s efficient tax price fell from 49 per cent to three per cent over the identical interval.

Column chart of Income taxes as a percentage of profits before tax showing Hapag-Lloyd’s tax rate has plunged as profits soared

“You might take into account [this system] a tax subsidy, [but] it’s troublesome to see the hyperlink between the tax subsidy and a societal profit,” mentioned Olaf Merk, a transport researcher on the OECD’s Worldwide Transport Discussion board.

He identified that transport had been exempted from an settlement on a worldwide minimal 15 per cent company tax, determined throughout talks on the OECD, following lobbying by the trade.

“It blows my thoughts there’s such little taxation of the sector, so after they have these bumper earnings they’ll simply ship them out to shareholders,” mentioned Aoife O’Leary, chief government of marketing campaign group Alternative Inexperienced.

Merk mentioned extra of the trade’s earnings might have been invested in chopping emissions.

O’Leary mentioned transport teams “must be paying for his or her air pollution”.

She added that the disappointing stage of funding in greening the fleet was “not stunning”, given the absence of sturdy regulation forcing transport to decarbonise.

Hapag-Lloyd’s Frese defended the tax system for transport, saying it “works” and had supported the trade by way of troublesome years when it struggled to show a revenue.

Maersk mentioned tax guidelines had been usually up for dialogue when earnings had been excessive, however added that transport was a “cyclical trade” and it was the accountability of politicians to make adjustments.

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