Maersk ups profit target by $2bn on Red Sea shipping woes

COPENHAGEN : Danish shipping giant Maersk said Thursday it expects its underlying profit in 2024 to be $2 billion higher than its previous forecast as freight rates have increased amid the crisis in the Red Sea.

Months of attacks by Yemen’s Iran-backed Huthis have prompted some shipping companies to detour around southern Africa to avoid the Red Sea route — which normally carries about 12 percent of global trade.

Maersk said in a statement that it was upgrading it’s 2024 full-year guidance “due to the continued supply chain disruption caused by the situation in the Red Sea, which is now expected to continue at least until the end of 2024, coupled with robust container market demand.”

The Danish company said it was now expecting its operating profit (earnings before interest, taxes, depreciation, and amortisation or EBITDA) to come in at between $9 and $11 billion for the full year.

Already in June, the shipping giant had upped its projected EBITDA by $3 billion to between $7 and $9 billion.

“Trading conditions remain subject to higher than normal volatility given the unpredictability of the Red Sea situation and the lack of clarity of supply and demand,” it added.

Maersk, which is due to report its second quarter earnings on August 7, said that based on preliminary figured it would report a revenue $12.8 billon, and EBITDA of $2.1 billion for the second quarter.

The Yemeni rebels have been launching drones and missiles at shipping in the Red Sea since last November, saying they are acting in solidarity with Palestinians during the Gaza war.

In July, a deadly Huthi drone strike on Tel Aviv prompted Israeli air strikes on Yemen’s port of Hodeida, which killed nine people and triggered a massive inferno.