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Maersk raises earnings forecast, sees no sign of ease in freight market

PUBLISHED ON 2021-09-16 22:02:00 EST Arghyadeep

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Shipping giant A.P. Moller-Maersk AS lifted the 2021 outlook again on Thursday and indicated that it sees no signs of the current red-hot shipping market will lose steam this year.

The Danish freighter lifted its third-quarter and full-year outlook, citing the rise in freight rates caused by continuing bottlenecks in the global supply chain.

The COVID-19 pandemic has prompted shortages of container ships and logjams at ports at a time of high consumer spending, has increased freight costs to record levels.

"The strong result is driven by the continuation of the exceptional market situation within Ocean, which have led to further increases in both long and short-term container freight rates," Maersk said.

"Nothing in our data suggests that the situation will change this year," Maersk Chief Executive Soren Skou told Reuters, adding that he expects global trade volumes to grow 7%-8% in 2021 compared to last year.

"We see very, very strong end-user demand combined with re-stocking and the fact that capacity in ports, warehouses, and on ships is not fully utilized due to COVID-19," he said.

Skou told Reuters that about 9% to 10% of global container capacity is currently sitting outside ports waiting to discharge, and the issue is particularly acute at Long Beach port in Los Angeles, where some 60 container ships are on a wait.

Maersk, which handles one in five containers shipped worldwide, increases its full-year underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) of $22 billion to $23 billion, up from the earlier estimate of $18 billion to $19.5 billion.

The shipping company, which is set to publish its third-quarter earnings on November 2, also reported EBITDA of close to $7 billion and EBIT of nearly $6 billion.

It said that the free cash flow for the year should be at least $14.5 billion, or $3 billion more than previously expected.

Picture Credit: Maersk

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