Danish shipping Giant "Maersk" fell by more than 17% in morning trading on Thursday, after it indicated “high uncertainty” in its profit forecasts for 2024 under the weight of Houthi attacks in the Red Sea and the increased supply of cargo ships.
According to CNBC, the company said that it would suspend share buybacks due to the uncertainty.
Maersk said it expects earnings before interest, taxes, depreciation and amortization (EBITDA) to range between $1 billion and $6 billion this year, compared to $9.6 billion in 2023.
Shares were trading down 16.25% at 2:00 p.m.
“The impact of this situation is causing new uncertainty,” Squickbomex Europe CEO Vincent Clerc said on CNBC.
He added: “We have little visibility into whether this situation will resolve within weeks or months, or whether this will continue with us throughout the entire year.”
The company added in a statement that its board of directors decided to “immediately suspend the share repurchase program, and restart it as soon as market conditions stabilize.”
This comes as the company reported lower-than-expected fourth-quarter earnings on Thursday, with EBITDA for the three-month period falling to $839 million versus the $1.13 billion analysts had expected.
Global supply chains have faced serious disruption since late 2023 after major shipping companies began diverting their flights away from the Red Sea following a series of attacks by Houthi rebels in Yemen.
The Houthis targeted commercial ships with drones and missiles, indicating that they ensured solidarity with the Palestinians amid the ongoing war between Gaza and Israel.
Diversions around one of the world's busiest shipping lanes have increased delivery times and costs, with the Organization for Economic Co-operation and Development warning on Monday that they could increase inflation.
The Paris-based group said the recent 100% rise in sea freight rates, if it persists, could lead to import price inflation across its 38 member states rising by about 5%.
Follow the latest news on Google News
