Shipping giant Maersk's profit sinks, warns of Red Sea risk

COPENHAGEN, Feb 08 (AFP): Shares in shipping giant Maersk dived on Thursday after it warned of an uncertain 2024 earnings outlook linked to an oversupply of container vessels and Yemeni rebel attacks in the Red Sea.
The downbeat forecast came after its 2023 earnings were hit by overcapacity in the shipping sector, which caused a drop in freight rates.
The group reported a more than sevenfold drop in its net profit last year to $3.8 billion, compared to $29.2 billion in 2022.
Its revenue reached $51 billion compared to $81.5 billion the previous year.
Freight rates had soared in 2022 due to capacity shortages amid high demand following the end of Covid pandemic restrictions.
"The high demand eventually started to normalise as congestions eased and consumer demand declined leading to an inventory overhang," Maersk said in its earnings report.
This "correction" resulted "in rapid and steep declines in shipped volumes and rates" starting at the end of the third quarter of 2022, it added.
The "oversupply challenges" in the maritime shipping industry are expected to "materialise fully" over the course of 2024, Maersk said.
The group lowered its 2024 forecast for its core profit-earnings before interest, tax, depreciation and amortisation-to a range of between $1.0 billion and $6.0 billion.