The Danish shipping giant announced on Thursday that its net profit would be divided by more than 7 in 2023. Following this announcement, its share price plummeted by more than 15% on the stock market. Among the main causes of this poor result is the context of tensions in the Red Sea.
Geopolitical uncertainty also affects the most solid and seasoned companies. This is what is happening to the Danish shipping giant Maersk, which expressed its concern about its 2024 outlook on Thursday.
"There remains considerable uncertainty about the duration and degree of disruption in the Red Sea, which could last from a quarter to a full year depending on the forecast range," the industry's number two said in a statement.
In 2024, the flagship of Danish industry (carrier of 15% of containers in the world) is therefore counting on an EBITDA (earnings before interest, taxes, depreciation and amortization) between 1 and 6 billion dollars (between 927 million and 5,56 billion euros), down on 2023.
Red Sea attacks blamed
In recent months, the continuous attacks in the Red Sea have become a nightmare for major shipping lines. Most of them, including Maersk, CMA CGM (owner of La Tribune), and MSC, have therefore decided to interrupt their traffic in this area for an alternative route around the South African Cape of Good Hope, which is a few days longer and more expensive.
Since November, the Houthis have said they have been targeting ships in the Red Sea and the Gulf of Aden that they believe are linked to Israel, in "solidarity" with Palestinians in Gaza, which is embroiled in a war between the Israeli army and the Islamist movement Hamas. A coalition of several countries, led by the United States, is trying to curb the threat.
There have been numerous exchanges of fire on both sides. The latest incident occurred before dawn on Wednesday, when US forces "struck two Houthi anti-ship missiles that were aimed at the southern Red Sea and were ready to be fired," the US military's Middle East Command (Centcom) said.
The economic consequences of these tensions are already being felt across the sector: according to an IMF note, container shipping through the Red Sea has fallen by almost 30% over the past year. Before the conflict, between 12 and 15% of global traffic transited through the Red Sea, the entry point to the strategic Suez Canal, according to figures from the European Union.
2023, a gray year for Maersk
The effects of this situation have also weighed substantially on Maersk's results in 2023. This Thursday, the carrier announced a net profit divided by more than 7 last year. Immediate consequence: its share price plummeted on the Copenhagen Stock Exchange by 15,58%, around 13 p.m. This, in a market in very sharp decline (-7,36%). Over the last twelve months, its share price has even fallen by almost 20%.
Over the whole of the past year, Maersk's net profit amounted to 3,822 billion dollars in a sector in "increasing overcapacity", hit by geopolitical crises and turnover at 51 billion, slightly beyond analysts' expectations who were counting on 3,504 and 50,93 billion dollars respectively. The group's EBITDA was divided by almost 4, to 9,591 billion, because of the pressure on prices.
From October to December last year, the shipping company reported losses of $456 million. Its overall revenue was $17,82 billion, down 34% year-on-year. In the last quarter, revenue from the ocean freight business, the group’s largest, fell 46% to $7,180 trillion. The Danish shipping company may have to wait until 2025 before it returns to profit, according to a Bloomberg Intelligence note.
Strategic plan revised and job cuts
With these mixed results, the group announced that it wanted to separate its towing activities from the Svitzer company, which will now be listed separately. Maersk also indicated that it would suspend "immediately" the fifth part of its share buyback program. The shipowner, founded in 1904, intends to "examine the possibility of relaunching it once the conditions in the "Ocean" sector have stabilized."
The consequences of this situation also affect jobs at Maersk, which has already cut 6.500 jobs in the first nine months of 2023. Last November, the carrier also announced the elimination of 3.500 additional jobs. Its overall workforce is expected to fall to less than 100.000 jobs, compared to 110.000 by the start of 2023. With this cut, the shipping company hopes to save $600 million.
(With AFP) latribune.fr
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