Maersk (AMKBY.US) raised its full-year earnings guidance for the third time, expecting global shipping disruptions to last until the end of the year.
1min read Global shipping giant Maersk (AMKBY.US) said the global shipping disruption caused by the conflict in the Red Sea will last longer than expected and will not be resolved this year, as it raised its earnings guidance for the third time in three months, as freight rates continue to boost the company's profits. Maersk now expects EBITDA of $9bn to $11bn this year, up from $7bn to $9bn previously, and above the average analyst estimate of $8.76bn.
Maersk raised its full-year earnings guidance in May and June, when it said the Red Sea disruption had a greater impact on global supply chains than previously anticipated. The company said on Thursday that the disruption “is currently expected to last at least until the end of 2024”.
Houth Houthi attacks have forced ships to divert around the Cape of Good Hope in Africa, rather than through the Suez Canal, driving up freight rates. Bloomberg Intelligence estimates that the number of container ships passing through the Suez Canal is down about 77 per cent from a year ago. “Given the uncertainty of the Red Sea situation, as well as the lack of certainty in demand and supply in the fourth quarter, the transaction conditions will continue to be affected by higher than normal volatility,” Maersk said.
Maersk also raised its forecast for container trade growth in 2024 to 4 per cent to 6 per cent, up from 2.5 per cent to 4.5 per cent previously. The company expects free cash flow to be at least $2bn in 2024, up from at least $1bn previously.
Danske Bank Credit Research’s chief analyst, Brian Godsk Borsting, said: “The strong growth in container freight rates in recent months makes it understandable that Maersk has raised its expectations.”
Maersk will report its full second-quarter results on August 7, and its preliminary figures showed revenue of $12.8bn, below the average analyst estimate of $13.06bn; EBITDA of $2.1bn, below the average analyst estimate of $2.26bn.