Maersk raises full-year profit guidance after strong quarter

By Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) -Shipping group Maersk raised its full-year profit guidance after posting better than expected quarterly earnings on Thursday, citing strong container shipping demand and the diverting of vessels around Africa to avoid the Red Sea.

The Copenhagen-based company, viewed as a barometer of world trade, said growth in demand for ocean container shipping was at the upper end of the expected 2.5-4.5% range this year.

Maersk and rivals have diverted ships around Africa since December to avoid attacks by Houthi militants on vessels in the Red Sea, sending freight rates higher because of the longer sailing times.

“This not only supported a recovery in the first quarter compared with the previous quarter, but it also provided an improved outlook for the coming quarters. We now expect these conditions to stay with us for most of the year,” CEO Vincent Clerc said in a statement.

Maersk had warned in February that a wave of new container vessels entering the market this year and next will cause overcapacity and hurt profit.

Spot freight rates tripled to almost $3,500 a container at the beginning of the year but have since eased to about $2,400.

“We still anticipate the high number of new vessels being delivered during this and next year to eventually offset these factors and put ocean markets under renewed pressure,” Clerc said.

Analysts at Bernstein expect a 15% fleet expansion across 2024 and 2025, outstripping demand.

Maersk said it now expects full-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) this year between $4 billion and $6 billion, compared with previous guidance between $1 billion and $6 billion.

First-quarter EBITDA fell to $1.59 billion from $3.97 billion a year earlier, beating expectations of $1.46 billion in an LSEG poll of analysts.