Huge gantry cranes and unloading freighters in Haifa container port, Israel.
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LONDON – Shares in Danish shipping giant Maersk plunged more than 17% in morning trade on Thursday after the company reported “high uncertainty” in its 2024 profit outlook amid disruptions in the Red Sea and an oversupply of ships.
The company also announced it would suspend share buybacks due to the uncertainty.
Maersk said it expects adjusted EBITDA (or earnings before interest, taxes, depreciation and amortization) of between $1 billion and $6 billion this year, compared with $9.6 billion in 2023.
At 2:00 p.m. London time, shares were trading 16.25% lower.
“The impact of this situation creates new uncertainty about how this will play out from an earnings perspective over the course of the year,” CEO Vincent Clerc told CNBC’s “Squawk Box Europe.”
“We have little idea whether this situation will resolve itself within weeks or months or whether we will be affected by it throughout the year,” he added.
In a statement, the company added that its board had decided to “immediately suspend the share repurchase program and consider resuming it once market conditions prevail in Ocean.” [division] Have settled down.”
This came as the company reported fourth-quarter profit on Thursday that came in below expectations. EBITDA for the three-month period fell to $839 million versus analysts’ expectations of $1.13 billion.
Global supply chains have faced serious disruptions since late 2023 after major shipping companies began redirecting their shipments away from the Red Sea following a series of attacks by Yemen’s Houthi rebels.
The Iran-aligned group has attacked commercial ships with drones and missiles in what it says is an act of solidarity with Palestinians amid the ongoing Gaza-Israel war.
Diversions on one of the world’s busiest shipping routes have driven up delivery times and costs, and the OECD warned on Monday that it could lead to a rise in inflation.
The Paris-based group said the recent 100 percent increase in sea freight rates, if sustained, could lead to a nearly 5 percentage point rise in import prices across its 38 member countries.
The diversion has increased freight rates for shipping companies, but Clerc said those increases were unlikely to affect profits.
“From a revenue perspective, neither for the industry nor for Maersk when you look at the whole thing, I don’t think this is going to be something where we’re going to make a significant profit from the situation,” he said.
“Today, the level of costs we must incur to maintain the global supply chain is still unknown.”
Source : www.cnbc.com