Maersk announces 10,000 job cuts amid weaker shipping demand
Danish shipping group Maersk has experienced a substantial decline in Q3 revenue. This has prompted the firm to eliminate 10,000 jobs due to decreased freight rates and weakened demand for container shipping. CEO Vincent Clerc remarked, "Our industry is facing a new normal with subdued demand and inflationary pressure on our cost base." Although Maersk's full-year guidance for revenue and operating profit remains unchanged, the company anticipates both figures to be at the lower end of the spectrum.
Workforce reduction to save $600 million next year
Maersk plans to downsize its workforce from 110,000 to under 100,000, which is expected to save the company $600 million in 2024 compared to this year. The restructuring will result in a one-time cost of $350 million, primarily affecting the company's financial performance. Clerc noted that since the summer, the industry has been grappling with overcapacity in most regions, leading to price reductions and no significant increase in ship recycling or idling.
Q3 earnings and full-year expectations
In Q3, Maersk's earnings before interest, tax, depreciation, and amortization (EBITDA) plummeted to $1.9 billion from $10.9 billion the previous year, slightly surpassing analysts' predictions of $1.81 billion in a Refinitiv poll. Revenues dropped by 47% to $12.1 billion. For the entire year, the company projects underlying EBITDA to range between $9.5 billion and $11 billion, while underlying earnings prior to interest and taxes are estimated between $3.5 billion and $5 billion.
Demand for shipping containers by sea declining
Maersk had previously cautioned that worldwide demand for shipping containers by sea would experience a more significant decline this year. This is due to sluggish economic growth and the destocking in the wake of the COVID-19 pandemic.
