Maersk lifts 2024 guidance by $3 bln amid shipping woes

LONDON

Danish shipping giant Maersk expect its profits in 2024 to be $3 billion higher than previous projections as freight rates have increased amid the crisis in the Red Sea.

Months of Huthi 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 on the back of the "disruption caused by the ongoing crisis in the Red Sea" and "continued strong container market demand" it was now seeing signs of "further port congestions" and additional increases in container freight rates.

"This development is gradually building up and is expected to contribute to a stronger financial performance in the second half of 2024," Maersk said.

The Danish company said it was now expecting its underlying core profit (earnings before interest, taxes, depreciation, and amortisation or EBIDA) to come in at between $7 and $9 billion for the full year.

When reporting its first quarter earnings in May, Maersk said it expected this core profit to reach between $4 and $6 billion.

The rebels, who control much of Yemen, have carried out dozens of drone and missile attacks on ships since November, claiming solidarity with Palestinians over the Israel-Hamas war.

Since January, the United States and Britain have launched repeated strikes on Huthi targets in Yemen in response to the rebels' harassment of shipping.

Maersk said that trading conditions remained subject to volatility "given the unpredictability of the Red Sea situation and the lack of clarity of future supply and demand."