Danish shipping giant Maersk on Thursday flagged “high uncertainty” in its 2024 earnings outlook as Red Sea disruptions continue to weigh on the industry.
The company also said that it would be suspending share buybacks on the back of the uncertainty.
Given the heightened uncertainty, the Maersk board has decided to immediately suspend the share buy-back programme, with a re-initiation to be reviewed once market conditions in Ocean have settled.
Maersk warned on Thursday Red Sea trade disruptions would not be a major boost for the company and an oversupply of vessels would hit its earnings this year.
The diversions around one of the world’s busiest shipping lanes have pushed up delivery times and costs, with the shipping market warning Monday that it could increase inflation.
Vincent Clerc, chief executive of A.P. Moller-Maersk made it clear that while the Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually the oversupply in shipping capacity will lead to price pressure and impact its results.
Maersk, which like other shippers has been diverting some vessels on a longer route around Africa, said it expects for the full-year of 2024 underlying Ebitda between $1bn and $6bn, compared with the $9.6 billion achieved last year.
Ebitda also dropped to $9.6bn last year ($36.8bn in 2022) with a decrease in ocean of $26.8bn due to lower rates, and smaller decreases in logistics & services and in terminals.
Its revenue for 2023 decreased to $51.1bn, compared to $81.5bn in the year 2022, whilst Ebit saw also a decrease by $26.9bn to $3.9bn, compared to $30.9bn the year before.
Maersk, viewed as a barometer of world trade, expects that the ‘significant oversupply challenges’ in container shipping will materialise fully over the course of 2024, and be felt in 2025 and possibly in 2026.
“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,” it said in a statement.
