Maersk raises its profit forecast for the year thanks to increased demand

Shipping group Moller-Maersk, which is considered an indicator of the state of global trade, raised its full-year profit forecast after posting better-than-expected quarterly profits on Thursday.

This is due to the strong demand for container shipping in addition to the diversion of commercial ships to avoid passing through the Red Sea due to security concerns.

The Copenhagen-based company said growth in demand for ocean container shipping was at the higher end of the expected range of 2.5% to 4.5% for this year.

Since last December, Maersk and its competitors have diverted their ships around Africa to avoid Houthi attacks on ships in the Red Sea, which has led to higher shipping prices due to longer sailing times.

“This not only supported the recovery in the first quarter compared to the previous quarter, but also provided a better outlook for the coming quarters,” CEO Vincent Clerc said in a statement. “We now expect these conditions to remain with us for most of the year.”

Maersk had warned in February that a wave of new container ships entering the market this year and next would lead to oversupply and hurt profits.

Spot shipping rates rose nearly three-fold to about $3,500 per container at the beginning of the year but have since fallen to about $2,400.

“We still expect that the large number of new ships to be delivered over this year and next will eventually negate these factors and put shipping markets under renewed pressure,” Clerk said.

Maersk said it now expects core earnings before interest, taxes, depreciation and amortization this year to be between $4 billion and $6 billion, compared to its previous forecast of between $1 billion and $6 billion.

Despite this, the company’s first-quarter EBITDA fell 60% to $1.59 billion compared to $3.97 billion a year earlier, but beat expectations of $1.46 billion in an LSEG survey.