Maersk issues profits warning as freight rates, volumes slump

Shipping giant AP Moller-Maersk issued a profit warning on Wednesday due to a slump in container volumes and freight rates.

The Danish company has enjoyed soaring profits in the last two years as displaced supply chains in the wake of the Covid pandemic saw freight rates spiral with companies desperate to source raw materials and consumer goods.

However, with rates on the slide amid the inflation and cost-of-living crisis combined with a reduction in major economies, Maersk said it expected global container demand to fall by as much as 2.5% as firms started to reduce inventory stockpiles.

Freight rates fell by nearly 25% in the fourth quarter versus the previous three months.

"The shipping market looks difficult right now. Freight rates have stabilised at a lower level that is not catastrophic for us," said new chief executive Vincent Clerc.

Maersk expects underlying core earnings of $8-11bn, compared with $36.8bn last year and below forecasts of $11.9bn in a company-compiled.

In its latest quarterly results underlying core earnings fell to $6.52bn compared with $8bn a year earlier and the $6.95bn expected by analysts. Revenue fell to $17.8bn as the number of containers it loaded on to ships fell by 14%.

Reporting by Frank Prenesti for Sharecast.com