Maersk cuts workforce by 10,000 as earnings turn negative
Latest cutbacks will see a further 3,500 jobs lost, while up to 2,500 roles will be eliminated in the coming months, with the remainder extending into 2024
Earnings before interest and taxes for its core ocean business turned negative at $27m in July-September. Chief executive Vincent Clerc warns of challenging times ahead
DANISH shipping giant Maersk has announced it will cut a further 3,500 jobs, as earnings for its core container shipping business plunged into negative territory in the third quarter.
The move will bring the total job cuts since early 2023 to 10,000 positions.
Up to 2,500 roles will be eliminated in the coming months, with the remainder in 2024, the company said.
This will reduce its global workforce to below 100,000, but total expected restructuring charges are expected to reach $350m, up from $150m revealed in February.
“The adjustment of the workforce complements the decisive actions taken on cost containment throughout the year,” said Maersk, adding the move will lower its selling, general and administrative expenses cost by $600m for next year.
Amid severe freight rate pressure, earnings before interest and taxes for its ocean business turned negative at $27m in July-September, plunging from $8.7bn during the same period of last year.
However, when excluding depreciation, amortisation and impairment losses for a better reflection of operating performance, earnings rebounded to $1.1bn in positive territory, yet still down about $8.8bn year on year.
Ocean ebitda also slid by around 50% from the previous quarter, despite a seasonal lift that increased volumes by 9%.
“Our industry faces a new normal of subdued demand, lower prices and cost inflation,” said chief executive Vincent Clerc.
“Since summer, overcapacity across regions has triggered rate drops without noticeable vessel idling or recycling,” he added. “Given challenging times ahead, we accelerated cost and cash containment to safeguard financials.”
The group’s logistics and services, and terminals units also saw declining earnings, albeit at a milder pace. Maersk said lower prices in air and trucking markets impacted results, although volumes were steady.
The company’s consolidated revenue tumbled 46.9% year on year to $12.1bn in the three months, while ebit dropped to $538m from the year-ago level of $9.5bn.
Maersk now sees global container volumes to fall in the -2% to -0.5% range compared with -4% to -1% previously.
It maintained full-year 2023 guidance ranges, but expects results towards the lower end, including underlying ebitda of $9.5bn-$11bn and an underlying ebit of $3.5bn-$5bn