[1/2]Containers are seen on Maersk’s giant Triple-E container ship Majestic Maersk, one of the largest container ships in the world, next to cranes at the APM terminals in the port of Algeciras, Spain, January 20, 2023. Portal/Jon Nazca/File Photo Acquire LICENSE RIGHTS
- Signals a sharp decline in demand
- Review of the 2024 share repurchase program
- Says industry faces overcapacity and lower prices, demand
- Shares fell 17.5% to their lowest level in three years
COPENHAGEN, Nov 3 (Portal) – Shipping group AP Moller-Maersk (MAERSKb.CO) reported a sharp fall in third-quarter profit and sales on Friday and said it would cut at least 10,000 jobs and weaken them amid overcapacity and rising costs Prices caused stocks to crash.
Maersk, which controls about a sixth of the world’s container trade and transports goods for many major retailers and consumer goods companies such as Walmart and Nike, saw demand fall sharper than analysts and investors expected.
“The new normal that we are now heading towards is characterized by a more subdued macroeconomic outlook and therefore lower volume demand for the coming years, prices that are back to historical levels, inflationary pressures on our cost base, particularly from energy costs, and also rising. “Geopolitical uncertainty,” said CEO Vincent Clerc in an investor call.
The industry invested heavily in new container ships during and after the pandemic to meet strong demand and benefit from record freight rates. A large number of new ships have come onto the market since the summer, with no signs of stalling or scrapping, Clerc said.
“If the fourth quarter doesn’t bring any improvements, then I think we’re looking at a pretty dire situation in 2024,” he said.
Negative sales growth in the third quarter was driven primarily by the retail and lifestyle sectors, particularly in North America, as well as automotive and technology, Clerc said.
Shares in the Copenhagen-based group fell to their lowest level in three years, trading 17.5% lower at 1141 GMT.
Jyske Bank analyst Morten Holm Enggaard said the share price was hit by Maersk’s announcement that it would reconsider whether it would continue its share buyback program until 2024.
“The only way we can interpret it is that in 2024 we will have to deal with something very bad, probably worse than we expected,” Enggaard said.
Maersk expects global container volumes in its maritime business, its largest segment, to fall by up to 2% this year, largely due to weak consumer demand and corporate destocking amid goods shortages in the wake of the coronavirus pandemic is .
Maersk, which employed 110,000 people in January, said it is in the process of reducing its workforce to under 100,000, which will result in savings of $600 million next year and beyond compared to this year.
The company maintained its full-year guidance for revenue and operating profit, but now expects both to come in at the lower end of the range.
Operating profit fell to $1.9 billion in the third quarter from $10.9 billion a year earlier. Revenue fell 47% to $12.1 billion.
Reporting by Jacob Gronholt-Pedersen and Louise Rasmussen, additional reporting by Johannes Birkebaek, editing by Terje Solsvik, Miral Fahmy, Elaine Hardcastle
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