Maersk to reduce 10,000 jobs, reports Q3 loss in ocean biz
Maersk Q3 ocean revenue down 56%, maintains 2023 outlook at lower end
Maersk has reduced headcount from 110,000 in early 2023 to around 103,500, and, given the worsening price outlook in ocean, is intensifying measures and plans to further decrease the workforce by 3,500 positions. " Nearly 2,500 positions will be reduced in the coming months, and the remaining to extend into 2024. This will reduce the global workforce to below 100,000 positions. Accordingly, the total expected restructuring charge is now expected at $350 million, up from $150 million announced in February," says an official release.
The workforce reduction will bring down Maersk’s selling, general and administrative expenses (SG&A) cost by $600 million for 2024. Capital expenditure has been adjusted downward for 2023 and 2024, and further measures are under review, including the continuation of the share buyback program into 2024, the release added.
Ocean biz reports loss
Maersk reported a 47 percent decline in consolidated revenue at $12.1 billion for the third quarter ended September 30, 2023 compared to $22.8 billion in Q32022 on lower freight rates and lower volumes. Consolidated EBIT plunged 94 percent to $538 million from $9.5 billion in Q32022.
Ocean revenue dropped 56 percent to $7.9 billion compared to $18 billion in Q32022. "EBIT was negative at $27 million, down from $8.7 billion in Q3 2022, driven by significant pressure on rates in particular on Asia to Europe, North America and Latin America trades."
Revenue in logistics & services was $3.5 billion compared to $ 4.2 billion in Q32022, down 17 percent. "The segment was impacted negatively by lower prices, especially in the air and haulage market, while volumes were broadly back in line with last year’s level. Increased cost management helped stabilise margins sequentially."
Terminals reported revenue at $1 billion compared with $1.1 billion in Q32022, driven by less demand for storage amid eased global congestion and a 4.1 percent decline in volume.
"Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base," says Vincent Clerc, CEO, Maersk. "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."
Maersk now sees global container volume growth in the range of -two percent to -0.5 percent compared to - four percent to -one percent earlier, and ocean revenue is seen growing 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 $9.5-11 billion and underlying EBIT of $3.5-5 billion.”
The guidance for 2024 will be given on February 8, 2024 as part of the release of the annual results.