Maersk, the world’s largest shipping group, dropped over 9% in early trading after confirming it was cutting 10,000 jobs and that profit would be at the low end of guidance.
Weak demand for shipping containers and lower freight rates have led the Danish company to place its full-year pre-tax profit forecast at the lower end of its US$9 billion to US$11 billion range.
Third-quarter underlying earnings slid from US$10.9 billion in 2022 to US$1.9 billion in 2023, while revenues dropped by close to 50% to US$12.1 billion, a trading update revealed.
The company said it expects global container volume growth for 2023 to be in the range of -2% to -0.5%, an improvement on its previous forecast of -4% to -1%. Its Ocean business is expected to grow in line with the market, it added.
Rigorous cost-saving measures have taken place over the years and have helped reduce full-year capital expenditure guidance from between US$10 billion and US$11 billion to between US$8 billion and US$9 billion.
Driving this reduction is job cuts, which have already seen the workforce trimmed from 110,000 to 103,500 in the year to date, with an additional 2,500 cuts set to take place in the coming months before a further 1,000 are axed in 2024.
Vincent Clerc, chief executive officer of Maersk, said: “Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base. Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling.
“Given the challenging times ahead, we accelerated several costs and cash containment measures to safeguard our financial performance.”
Shares in Maersk are down 32% in 2023, having opened trading in Denmark at around DKK1,100 on Friday.