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Maersk warns oversupply to hit profits amid Red Sea uncertainty

2024.02.08 04:32


© Reuters. FILE PHOTO: Maersk’s emblem is seen in saved containers at Zona Franca in Barcelona, Spain, November 3, 2022. REUTERS/Albert Gea/File Photo

By Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) -Maersk stated on Thursday Red Sea commerce disruptions wouldn’t be a serious increase for the corporate and an oversupply of vessels would hit its earnings this 12 months, sending its shares sharply decrease.

The warning, which additionally led the Danish group to droop its share buyback programme, is in stark distinction with buyers’ latest optimism concerning the sector.

Shipping firms have been among the many greatest performing shares in Europe to this point in 2024 because the re-routing of vessels following assaults on delivery by Iranian-backed Houthi militants within the Red Sea – a serious buying and selling route – boosted freight charges.

Maersk, which like different shippers has been diverting some vessels on an extended route round Africa, stated it anticipated underlying earnings earlier than curiosity, tax, depreciation and amortisation (EBITDA) of between $1 billion and $6 billion this 12 months, in contrast with the $9.6 billion achieved final 12 months.

Analysts in an LSEG ballot are on common forecasting Maersk, which is seen as a barometer of world commerce, to put up EBITDA of $6.6 billion this 12 months.

The firm stated it anticipated “significant oversupply challenges” in sea-going container delivery to materialize totally throughout 2024. Pandemic-related bottlenecks that boosted profits amongst delivery firms in 2022 resulted in a wave of recent vessel orders.

“High uncertainty remains around the duration and degree of the Red Sea disruption with the duration from one quarter to full year reflected in the guidance range,” the corporate added in an announcement.

CEO Vincent Clerc stated these disruptions by no means resembled what occurred to container delivery in the course of the pandemic and wouldn’t be a serious increase for the corporate.

Sydbank analyst Mikkel Emil Jensen known as the monetary report “weak” and stated the corporate’s steerage indicated a internet loss for 2024.

Maersk’s shares dropped 12% on the open, whereas these of rival Hapag-Lloyd fell round 10%.

Maersk stated EBITDA dropped to $839 million within the fourth quarter from $6.54 billion a 12 months earlier, lagging analysts’ expectations of $1.13 billion.

The firm additionally suspended its share buyback programme and stated it will overview the choice as soon as market situations in ocean container delivery had settled.

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