Maersk to cut 10,000 jobs; lowers profit guidance

AP Moller-Maersk is to cut more than 10,000 jobs worldwide, the shipping group confirmed on Friday, after demand and prices both fell sharply.

The Danish firm also warned that full-year earnings would now come in at the lower end of forecasts.

Vincent Clerc, chief executive, said: "Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base.

"Since the summer, we have seen over capacity across most regions, triggering price drops and no noticeable uptick in ship recycling or idling. Given the challenging times ahead, we accelerated several cost and cash containment measures to safeguard our financial performance."

The firm, which employs 110,000 people worldwide, intends to reduce its workforce to below 100,000, resulting in savings of $600m in 2024. The move will push up restructuring costs to $350m from $150m.

Capital expenditure has also been cut for both the current year and 2024, and the 2024 share buyback programme is being reviewed.

Full-year earnings before interest and tax are also expected to come in at the lower end of its previously forecast range, of between $3.5bn and $5bn. Earnings before interest, tax, depreciation and amortisation are set to come in towards the bottom of the range, of between $9.5bn to $11bn.

The update came as Maersk posted a slump in third-quarter revenues, although the results were in line with internal expectations. Revenues tumbled to $12.1bn from $22.8bn a year ago, dragged lower by its ocean division, which saw revenues fall to $7.9bn from $18.0bn.

Group EBITDA plunged to $1.9bn from $10.9bn, while pre-tax profits fell to $538m from $9.5bn.

Freight rates and demand for container shipping soared during the pandemic, leading to record revenues and profits for logistics companies. But post-pandemic, both demand and rates have moderated.

"While volumes were up in most segments and cost reductions improved results, rates continued to erode, in particular in ocean, and we are now close to 2019 levels," Maersk noted.

As at 0830 GMT, shares in Maersk were down 11%.