Shipping company A.P. Moller-Maersk reported a significant reduction in profit and revenue for the third quarter. The company will cut 10,000 jobs due to lower freight rates and dwindling demand for container shipping.
CEO Vincent Clerc stated that the industry is now facing a new normal, with subdued demand, historical levels of pricing, and inflationary pressure on its cost base. Overcapacity across most regions has triggered price drops, and there is no noticeable uptick in ship recycling or idling. The company had already warned of a steeper decline in global demand for shipping containers due to slow economic growth and destocking in the aftermath of the COVID-19 pandemic. Maersk plans to cut its workforce from 110,000 in January this year to below 100,000, resulting in savings of $600 million compared to this year.
The company expects underlying earnings before interest, tax, depreciation, and amortization for the year at between $9.5 billion and $11 billion, while underlying earnings before interest and taxes are expected between $3.5 billion and $5 billion. EBITDA dropped to $1.9 billion in the third quarter from $10.9 billion a year earlier, slightly above analysts’ expectations of $1.81 billion in a Refinitiv poll. Revenues fell 47% to $12.1 billion.
The company aims to keep its full-year guidance for revenue and operating profit but now expects both to land at the lower end of the range. A one-time cost of $350 million related to the restructuring would mostly impact its 2023 financial performance, the company said.