Maersk Lifts Outlook On Red Sea Disruption

AP Moller–Maersk has revised its 2024 financial forecast after a strong first quarter. The company now expects full-year 2024 adjusted EBIT  to be between -$2 billion and $0 billion. Representing a significant recovery from his 2023 fourth quarter. The increase in profit was also due to the strong performance of the terminal division. Including increased demand and the ongoing crisis in the Red Sea. Which is also expected to impact the company’s results in the second half of the year.

“The year started on a positive note. And the first quarter was exactly as expected,” said his Maersk CEO Vincent Clair. “Demand is trending towards the high end of our market growth forecast, and conditions in the Red Sea remain stable. This not only supported the recovery in the first quarter compared to the previous quarter. But also improved the outlook for the coming quarters. As this situation is expected to continue for most of this year.” The large number of new ship deliveries in the coming years. Will offset the positive factors and put new pressure on the sea freight market.

Cost Reduction

“Therefore, we are relentlessly pursuing cost challenges with the aim of reducing costs. Associated with maritime disruptions and restoring logistics and service margins. This cost optimization is part of our strong value proposition and is critical to supporting our customers. By ‘preventing ongoing volatility and building a more resilient business,’ he said. The company’s marine division reported improvements due to high volume production and cost discipline. While its logistics and services division reported “unsatisfactory” margins. Despite increased production due to low inventory utilization and contract fulfillment difficulties. It’s not going to happen,” he said. The Terminal division reported strong performance, with improved profit margins driven by cost control and high productivity.

In line with its goal of focusing on end-to-end logistics, Maersk has streamlined its portfolio through the spin-off of Svitzer, which was approved and completed in April.Maersk has expanded its financial guidance for 2024 and now expects adjusted EBITDA of $4 billion to $6 billion, down from $1 billion to $6 billion previously. This optimistic forecast is based on the company’s strong market demand and market-led growth. However, the company remains cautious about ongoing shipping challenges and their potential impacts.”The ongoing Red Sea/Gulf of Aden situation is expected to continue into the second half of the year. “Oversupply remains a challenge and will eventually grow, but the impact will be delayed,” Maersk said.

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