Danish conglomerate A. P. Mller-Maersk A/S on Friday cut its full-year profit guidance, saying global demand for container shipping – the conglomerate’s biggest contributor – has been weaker than expected.
The company said it expected underlying earnings to come in at $3.4 billion this year, compared with its previous guidance of $4 billion, based on a weaker-than-expected performance at its Maersk Line unit, the world’s biggest container-shipping operator in terms of capacity. That unit now expects full-year underlying earnings of $1.6 billion, compared with an earlier forecast of more than $2.2 billion.
Maersk said its third-quarter net profit was $778 million, compared with $1.47 billion last year.
At midday Friday, shares in the company were trading 6.8% lower at 9,760 Danish kroner in Copenhagen.
The profit warning is the latest in a series of dire forecasts from the global container-shipping industry. Maersk, the industry giant, has served as a bellwether, not just for the industry but for global trade in general.
Over the past three years, the world’s top 20 container operators have attempted to consolidate and form mega-alliances, in an effort to cut costs in the wake of the global economic crisis, which decimated global trade and exposed massive overcapacity of ships. But they have also spent billions of dollars on giant container ships, which are cheaper to steam and more efficient when they are full, adding even more capacity to the world’s fleet.
This post was published at David Stockmans Contra Corner on October 23, 2015.
Recent Comments