Maersk, a shipping industry giant, saw its Q3 revenue halved, announced layoffs of at least 10,000 employees, and suffered a sharp stock price decline—what information does this convey? How should we assess the current state of the shipping industry?

During the pandemic, Maersk’s profits and performance were at their best! After reaping this wave of windfall gains, the company immediately initiated layoffs—not because of simple losses, but rather as a sign of strategic foresight. Freight rates surged significantly during the pandemic; now, however, they have declined due to the pandemic’s end and the cyclical nature of the maritime shipping industry (i.e., a bull phase inevitably followed by a bear phase), prompting Maersk to undertake a strategic adjustment. In 2022, Maersk achieved record-breaking results: revenue grew 32% to USD 81.5 billion, and EBIT rose 57% to USD 30.9 billion—the best performance in the company’s history. Similarly, Hapag-Lloyd, the world’s fifth-largest container shipping line, also performed well: despite virtually unchanged cargo volumes, its EBIT increased by 66.7% year-on-year. Kang Shuchun, President of the International Freight Forwarding Branch of the China Federation of Logistics & Purchasing, analyzed that the entire industry posted strong profitability in 2022—but this did not reflect companies’ underlying earning power. Rather, it stemmed from an abrupt shift in supply-demand dynamics during the pandemic, generating unexpected windfall gains.

Ignoring operational improvements while focusing solely on non-GAAP losses: the misinterpreted Q3 financial report of Seres

Particularly noteworthy is Seres’ deconsolidation of SaiDou Technology in Q3 and its further adjustment of the collaboration model with Huawei for the Aito brand, enabling the company to concentrate more operational resources on its premium automotive business. As a new round of technological investment and product iteration gradually materializes, Seres is laying the groundwork for its next stage of operational growth. Significant improvement in Q3 operational quality: non-GAAP net loss narrowed by RMB 1.1 billion Seres’ interim report showed that in H1, the company recorded a net loss attributable to shareholders of RMB 1.717 billion, with revenue down approximately 7.9% year-on-year. At that time, the main operational pressure fell on Q2, when its flagship models were undergoing a transitional phase between generations, prices of critical components such as batteries and chips rose, and some legacy assets were impaired due to technological upgrades. If H1 is split into two quarters, Seres reported a net profit attributable to shareholders of RMB 754 million in Q1, but a net loss of RMB 2.471 billion in Q2. Q2 revenue reached RMB 31.747 billion—higher than Q1—but gross margin declined from 26.24% in Q1 to 20.92% in Q2. Another set of figures easily overlooked in the interim report: Seres’ asset impairment losses totaled RMB 1.82 billion in H1, of which approximately RMB 1.768 billion occurred in Q2. As new energy vehicle (NEV) technology pathways rapidly evolve, the applicability of certain legacy assets becomes constrained, prompting the company to recognize impairment charges on related assets. For NEV enterprises undergoing large-scale technological investment, asset renewal and technological iteration inherently entail gains or losses that constitute part of operating costs. In Q3, Seres turned from a net loss attributable to shareholders of RMB 2.471 billion in Q2 to a net profit of RMB 1.42 billion—a Q2-to-Q3 improvement of RMB 3.891 billion. However, considering that SaiDou Technology completed a capital increase and share expansion in July and was consequently deconsolidated from Seres’ consolidated financial statements, non-recurring gains amounted to RMB 2.785 billion. This business restructuring is key to understanding the substantial one-time gain in Q3. Under accounting standards, once a parent company loses control over a subsidiary, it must cease consolidating the related assets and liabilities and remeasure any retained equity interest—potentially generating a one-time gain. After excluding non-recurring items, Seres’ non-GAAP net loss for Q3 stood at RMB 1.365 billion—still representing a narrowing of RMB 1.116 billion compared to Q2. A major contributing factor was the sharp reduction in asset impairment losses: from approximately RMB 1.768 billion in Q2 to about RMB 94 million in Q3. Since asset impairments are typically included in non-GAAP profit calculations, this change significantly impacted quarter-on-quarter profit comparisons. On selling expenses, Seres spent RMB 4.752 billion in Q2, declining to RMB 3.814 billion in Q3—a reduction of roughly RMB 938 million. The selling expense ratio also fell from 14.97% to 13.58%. Meanwhile, revenue declined from RMB 31.747 billion to RMB 28.08 billion; the fact that the expense ratio continued to fall even amid lower revenue indicates tangible improvements in Seres’ marketing and cost management. Seres noted that rising raw material prices contributed to an approximate RMB 2.5 billion increase in cost of goods sold in Q3. Facing external cost pressures, Seres maintained a high level of R&D intensity.

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