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International Cooperation Department
Tel.: (+86-21) 65853850-8034
Fax: (+86-21) 65373125
E-mail: ICDept@sisi-smu.org
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International Shipping |
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| Maersk raises overall 2024 earnings forecast despite challenges |
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Date:2024-05-06 Readers:
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Maersk demonstrated their optimism for the start of the year in their recent first quarter results report, and as a result the company has raised its overall performance expectations for 2024. Maersk has benefited from the tensions in the Red Sea despite their impact on the shipping market.
Based on this year's forecasts, Maersk has raised its full-year earnings before tax, interest, depreciation and amortisation (EBITDA) forecast for 2024 to between $4bn and $6bn, which is well above the previous forecast range ($1bn to $6bn).
Prior to the earnings announcement, investors were widely predicting higher freight rates due to problems in the Red Sea and elsewhere, and that sent Maersk's shares up more than 20 per cent. But Maersk said that overall, freight rates were under downward pressure year-on-year, despite peaking in mid-January and rising in the quarter compared to the fourth quarter of last year.
At the same time, operating costs for Maersk's ships are rising due to increased sailing distances on a number of routes, especially the re-routing of routes south of the Cape of Good Hope which has led to a significant increase in both fuel consumption and operating costs.
Maersk's chief executive Vincent Clerc said that despite the challenges in the market, demand was growing and conditions in the Red Sea in particular remained tough. He said these conditions not only supported the company's recovery in the first quarter, but also improved the outlook for the coming quarters.
On the financial front, Maersk reported a profit of nearly $1bn from its shipping business in the first quarter and revenues of more than $8bn. However, overall, the company's profits declined compared to last year.
Ko also mentioned that while the volume of logistics business is growing, profit margins are not as good as they could be and some warehouses are under-utilised. However, the terminal business achieved good volume growth at the beginning of the year.
In order to address these challenges, Ko said the company will continue to push ahead with its cost-control programme to reduce costs associated with transport disruptions and restore margins in logistics and services. Last year, Maersk had already cut costs by laying off staff.
Kerwin also warned that despite the current good market performance, with new container ships coming into the water, this year and next year will face the pressure of excess capacity, thus adversely affecting the profitability of shipping companies. He said that spot rates, although they had risen to triple the level of nearly $3,500 per container at the beginning of the year, have since slowed down. bernstein analysts predicted that the number of container fleets will grow by 15 per cent by 2024 to 2025, leading to an oversupply of capacity.
https://www.cnss.com.cn/html/shipbuilding/20240506/353086.html
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