Shipping giant Maersk has raised its full-year earnings and market demand forecasts, citing disruptions in the Red Sea trading routes as a significant factor. The Danish company, a key barometer of global trade, announced that it now anticipates global container market volumes to grow by 4-6% this year, a notable increase from its previous forecast of 2.5-4%.
The upward revision in the forecast comes as Maersk navigates through substantial disruptions caused by attacks on vessels in the Red Sea by Iran-aligned Houthi militants. These disruptions have severely impacted a critical shipping route vital for east-west trade, resulting in re-routed shipments, higher freight rates, and congestion in key Asian and European ports.
Despite the optimistic revision, Maersk has expressed caution regarding the year’s fourth quarter. The company noted that while the current disruptions are expected to persist at least until the year’s end, there is considerable uncertainty surrounding supply and demand for the remaining months of 2024. This uncertainty has created an environment of heightened volatility in trading conditions.
In addition to adjusting its market volume forecast, Maersk also revised its earnings outlook. The company now projects its underlying earnings before interest, tax, depreciation, and amortization (EBITDA) to be between $9 billion and $11 billion for the year, up from the previous estimate of $7-9 billion. Underlying earnings before interest and tax are now seen at $3 billion to $5 billion from $1 billion to $3 billion previously.
The announcement initially caused Maersk’s share price to rise, but the stock later reversed course and was trading down 0.5% as of 1252 GMT. This reflects the market’s mixed reaction to the updated forecast amidst ongoing global trade uncertainties.
Maersk’s updated guidance marks the third time this year that the company has adjusted its forecast, underscoring the global shipping industry’s dynamic and often unpredictable nature. Preliminary revenue for the second quarter came in at $12.8 billion, slightly below analysts’ expectations of $13.0 billion. EBITDA for the same period also saw a decline, falling to $2.1 billion from $2.9 billion a year ago. The company is scheduled to release its full quarterly earnings report on August 7, providing further insight into its financial performance and strategic outlook. As Maersk continues to adapt to a rapidly changing market landscape, the focus remains on navigating the ongoing disruptions and positioning itself to meet evolving global trade demands.
