- Home
- War in the Middle East
- Shipping Giant Maersk's Net Profit Drops Sevenfold
©(Photo by Sergei GAPON / AFP)
Shares of shipping giant Maersk plummeted on Thursday, following its cautionary statement about the uncertain earnings outlook for 2024, attributed to an oversupply of container vessels and attacks by the Houthis in the Red Sea.
Shares of shipping giant Maersk took a dive on Thursday after it warned of an uncertain 2024 earnings outlook linked to an oversupply of container vessels and Houthi militant attacks in the Red Sea.
The downbeat forecast came after its 2023 earnings were hit by overcapacity in the shipping sector, which caused a drop in freight rates.
The group reported a more than sevenfold drop in its net profit last year to $3.8 billion, compared to $29.2 billion in 2022.
Its revenue fell to $51 billion from $81.5 billion the previous year.
Maersk's stock price closed almost 15% lower on the Copenhagen stock exchange Thursday, also hurt by the company's announcement it was suspending its share buyback plan.
Freight rates had soared in 2022 due to capacity shortages amid high demand following the end of COVID-19 pandemic restrictions.
"The high demand eventually started to normalize as congestion eased and consumer demand declined, leading to an inventory overhang," Maersk said in its earnings report.
The "oversupply challenges" in the maritime shipping industry are expected to "materialize fully" over the course of 2024, Maersk said.
The group lowered its 2024 forecast for its core profit—earnings before interest, tax, depreciation and amortization—to a range of between $1 billion and $6 billion.
"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," Maersk said.
Two of the company's ships had been targeted in the Red Sea.
Maersk and other shipping companies have redirected ships away from the Red Sea, taking the longer and costlier route around the southern tip of Africa.
Yemen's Iran-backed Houthi militants have either attacked or threatened commercial vessels more than 40 times since November 19, according to the Pentagon.
The Red Sea usually carries about 12% of global maritime trade.
Khalil Wakim, with AFP
Shares of shipping giant Maersk took a dive on Thursday after it warned of an uncertain 2024 earnings outlook linked to an oversupply of container vessels and Houthi militant attacks in the Red Sea.
The downbeat forecast came after its 2023 earnings were hit by overcapacity in the shipping sector, which caused a drop in freight rates.
The group reported a more than sevenfold drop in its net profit last year to $3.8 billion, compared to $29.2 billion in 2022.
Its revenue fell to $51 billion from $81.5 billion the previous year.
Maersk's stock price closed almost 15% lower on the Copenhagen stock exchange Thursday, also hurt by the company's announcement it was suspending its share buyback plan.
Freight rates had soared in 2022 due to capacity shortages amid high demand following the end of COVID-19 pandemic restrictions.
"The high demand eventually started to normalize as congestion eased and consumer demand declined, leading to an inventory overhang," Maersk said in its earnings report.
The "oversupply challenges" in the maritime shipping industry are expected to "materialize fully" over the course of 2024, Maersk said.
The group lowered its 2024 forecast for its core profit—earnings before interest, tax, depreciation and amortization—to a range of between $1 billion and $6 billion.
"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," Maersk said.
Two of the company's ships had been targeted in the Red Sea.
Maersk and other shipping companies have redirected ships away from the Red Sea, taking the longer and costlier route around the southern tip of Africa.
Yemen's Iran-backed Houthi militants have either attacked or threatened commercial vessels more than 40 times since November 19, according to the Pentagon.
The Red Sea usually carries about 12% of global maritime trade.
Khalil Wakim, with AFP
Read more
Comments