Maersk to cut 10,000 jobs as shipping firm revenue slides

By Louis Goss

Global shipping giant A.P. Moeller-Maersk on Friday outlined plans to lay off at least 10,000 staff in a desperate bid to cut costs following a collapse in its third-quarter revenues.

The Danish shipping company announced plans to cut 9% of its entire workforce by the end of next year, by slashing its headcount from 110,000 at the start of 2023 to less than 100,000 in 2024.

Shares in Copenhagen-listed Maersk (DK:MAERSK.A) (DK:MAERSK.B) plunged 9% on Friday having lost 23% of their value over the past 12 months.

Maersk's plans are aimed at saving the company $600 million in 2024, following a 47% drop in its third-quarter revenues on the back of plunging sales from its freight shipping business due to heavy price competition.

The situation saw Maersk's profit drop 94% to $521 million.

Across the entirety of the company, Maersk generated third-quarter revenues worth $12.1 billion, down 47%, as sales fell across all segments of its business.

Maersk's lower revenues came as the company's Ocean segment, which accounts for 65% of its revenues, posted a $27 million loss in the third quarter, compared to profits worth $8.7 billion in the third-quarter of 2022.

Maersk CEO Vincent Clerc said: "Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base."

"Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling."

The Danish shipping company, which was first established in 1904, said the bulk of the job cuts will be carried out in 2023 and that the restructuring initiative will cost the firm $350 million.

The lay-off plans follow a boom in shipping company revenues during COVID-19 that saw Maersk increase its headcount as freight rates surged.

More recently, the downturn in the global economy has led to price competition in the sector, that saw Maersk shipping rates fall 58% year on year. Lower rates, in turn, offset any benefits of a 5% uptick in Maersk shipping volumes.

Maersk , meanwhile, held its current guidance for full year 2023 but said it expects EBITDA will fall at the lower end of its previously communicated range of $9.5 billion to $11 billion.

-Louis Goss

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11-03-23 0554ET

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