turmoil

 Adis Ajdin May 2, 2024 (Splash 247.com)

Danish liner giant Maersk has lifted the lower end of its full-year guidance as it expects the robust box market amid Red Sea disruptions to continue into the second half of the year.

The Copenhagen-based shipping and logistics group said its first-quarter profit of $208m on revenue of $12.4bn against last year’s $2.3bn and revenue of $14.2bn was in line with its expectations. The company’s share of net earnings stood at $177m.

The Vincent Clerc-led company, still standing second in the contanerline rankings, has diverted ships around south of the Cape of Good Hope since December to avoid attacks by Houthi militants on vessels in the Red Sea, sending rates higher due to the longer sailing times.

“This not only supported a recovery in the first quarter compared with the previous quarter, but it also provided an improved outlook for the coming quarters. We now expect these conditions to stay with us for most of the year,” Clerc said in a release.

With the Red Sea crisis still ongoing, Maersk noted that the Africa re-routing it to be extended potentially for the remainder of the year, suggesting an uplift in earnings.

Maersk said it now expects full-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) this year between $4bn and $6bn, againts its previous guidance starting at $1bn. First-quarter EBITDA fell to $1.59bn from $3.97bn a year earlier, beating market expectations by some $130m.

Nevertheless, the company reiterated its previous warning that a wave of new boxships entering the market in the coming years would cause overcapacity and potentially impact its bottom line.

“We still anticipate the high number of new vessels being delivered during this and next year to eventually offset these factors and put ocean markets under renewed pressure,” Clerc added.