Maersk said its revenue was USD 12.1bn compared to USD 22.8bn in Q3 2022, with an EBIT margin at 4.4% impacted by lower freight rates and lower volumes.
Moreover, Maersk stressed that it maintains its guidance ranges, but now expects to be towards the lower end of the ranges.
However, the big announcement was that yet more layoffs are to be made in the coming months.
In its press release regarding its Q3 figures, the shipping giant said it had imposed rigorous cost containment measures during the year to effectively cushion the impact of the challenging market conditions. This included reducing its workforce from 110,000 in early 2023 to around 103,500 today.
Maersk’s release then goes on to explain that another 3,500 staff will be let go:
“Given the worsening price outlook in Ocean, Maersk is intensifying those measures and today introduce plans to further decrease the workforce by 3,500 positions, with up to 2,500 to be carried out in the coming months and the remaining to extend into 2024. This will reduce the global workforce to below 100,000 positions. Accordingly, total expected restructuring charge is now expected at USD 50m, up from USD 150m announced in February.”
The company added:
“The adjustment of the workforce complements the decisive actions taken on cost containment throughout the year. The accumulated effect will bring down Maersk’s selling, general and administrative expenses (SG&A) cost by USD 600m for 2024. In addition, CAPEX spend has been adjusted downward for 2023 and 2024 and further measures are under review, including the continuation of the share buyback program into 2024. Guidance for 2024 will be given on 8 February 2024, as part of the release of the Annual Results.”
As for its guidance for the whole of 2023, Maersk said it now sees global container volume growth in the range of -2% to -0.5% compared to -4% to -1% previously. Additionally, Maersk expects Ocean to grow in line with the market.
“Maersk maintains its ranges for the full year 2023 guidance but now expects results towards the lower end of the previously communicated ranges of underlying EBITDA of USD 9.5-11.0bn and underlying EBIT of USD 3.5-5.0bn. Guidance for free cash flow (FCF) of at least USD 3.0bn remains unchanged,” said the company.
Commenting on the Q3 statement, Vincent Clerc, CEO of Maersk, 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. Given the challenging times ahead, we accelerated several cost and cash
containment measures to safeguard our financial performance. While continuously streamlining our organisation and operations, we remain dedicated to our strategy of fulfilling our customers’ diversified supply chain needs while pursuing growth opportunities across our Terminals business and Logistic & Services.”
Reacting to the news on LinkedIn, Lars Jensen made a number of observations about Maersk’s Q3 statement.
Regarding the workforce reduction, Jensen said it “should be noted that some of these are not lay-offs but rather positions which do not get re-filled when they become vacant due to natural turnover of staff.” Jensen also highlighted the fact that Maersk had gained market share in 2022.
On the other hand, Jensen described the reported physical volumes as “concerning”.
“Supply chain management volumes measured in cbm declined -2.7%. Intermodal volumes measured in FFE declined -12.6%. Only airfreight saw in increase of +12.3% when measured in tons,” noted Jensen.
In a side note, Jensen also added:
“The carriers were criticised for the low tax payments when the market was strong – which is of course due to the nature of the tonnage tax. We are now beginning to see the opposite effect. When profits decline the tonnage tax remains the same and the Maersk group paid 19.8% in tax of their net income in Q3.”
Photo: Bernhard Fuchs, CC BY 2.0, via Wikimedia Commons