Shares of shipping giant Maersk were on Thursday** after the company warned of uncertain earnings prospects in 2024 due to a surplus of container ships** and attacks by Yemeni rebels in the Red Sea.
This pessimistic outlook comes after the company's 2023 earnings were hit by overcapacity in the shipping industry, which led to lower freight rates.
The group reported a more than seven-fold drop in net profit to $3.8 billion last year, compared with a net profit of $29.2 billion in 2022.
Its revenue reached $51 billion, compared with $81.5 billion last year.
Freight rates soared in 2022 due to strong demand and capacity shortages after COVID restrictions ended.
In its earnings report, Maersk said: "High demand is finally starting to normalize as congestion eases and consumer demand leads to excess inventory. ”
The company added that this "adjustment" resulted in a "rapid and sharp decline in shipments and rates" from the end of the third quarter of 2022.
Maersk said the "most surplus challenge" in the maritime industry is expected to be "fully realized" in 2024.
The group lowered its 2024 core profit forecast (EBITDA) to between $1 billion and $6 billion.
"There is still a great deal of uncertainty about the duration and extent of the disruption in the Red Sea, which is reflected in the guidance from a quarter to the full year," Maersk said. ”
Maersk's share price on the Copenhagen Exchange exceeded 13% following the earnings report, which also announced the suspension of its buyback program.
Robert Maersk Uggla, Chairman of Maersk, and Vincent Cllerc, Chief Executive Officer, said in earnings reports: "2023 ended with a number of distressing attacks on cargo ships in the Red Sea and the Gulf of Aden. ”
They noted that two of the company's ships had been targeted.
We are shocked by the escalation of this unfortunate conflict," they said.
Maersk and other shipping lines have diverted ships from the Red Sea to the southern tip of Africa for longer, more expensive routes.
The Red Sea typically hosts 12% of the world's sea**.
Iranian-backed Houthi rebels in Yemen have been harassing ships crossing the Red Sea since last November.
They said they were targeting ships linked to Israel, the United States and Britain as a show of support for the Palestinians in the Gaza war.
Their attack sparked retaliation from the American and British teams.
According to the Pentagon, Houthi rebels have attacked or threatened merchant ships more than 40 times since November 19.
Maersk reported a loss of 4$5.6 billion, with sales down 34% from the same period in 2022 to $17.8 billion.
"While the Red Sea crisis has caused immediate capacity constraints and temporary rates, the ultimate oversupply of shipping capacity will cause pressure and impact our performance," CLLERC said in a separate statement. ”
Maersk also announced that it would spin off its tugboat business, Svitzer, to become an independent, publicly traded company.