Maersk raises full-year profit guidance after strong quarter

Shipping giant Maersk raised its annual profit forecast after reporting stronger-than-expected quarterly earnings on Thursday, attributing the performance to robust container shipping demand and strategic vessel diversions around Africa to bypass the Red Sea.

The Copenhagen-based company, considered a bellwether for global trade, noted that ocean container shipping demand growth is at the higher end of the anticipated 2.5-4.5% range for this year.

Since December, Maersk and its competitors have rerouted ships around Africa to steer clear of attacks by Houthi militants in the Red Sea, leading to increased freight rates due to longer travel times.

In February, Maersk had cautioned about the impact of a wave of new container vessels entering the market in 2022 and 2023, anticipating overcapacity and subsequent profit pressure.

Spot freight rates surged to nearly $3,500 per container earlier this year but have moderated to around $2,400.

Analysts at Bernstein project a 15% expansion in fleet capacity between 2024 and 2025, surpassing demand growth.

Maersk revised its full-year guidance, now expecting underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) to range between $4 billion and $6 billion for the year, compared to the previous estimate of $1 billion to $6 billion.