Suspends its share buyback plan and warns of the impact of the Red Sea crisis

It will spin off its towing business, Svitzer, as an independent entity listed on the Copenhagen Stock Exchange


The Danish conglomerate AP Moller-Maersk, owner of the second largest maritime freight transport operator, achieved an attributable net profit of 3,822 million dollars (3,549 million euros) in 2023, which represents a fall of 86.9% compared to the previous year and its worst annual result since 2020.

In fact, between October and December 2023, the Danish giant recorded losses of 436 million dollars (405 million euros), in contrast to the attributable net profit of 4,950 million dollars (4,597 million euros), recorded in the same 2022 period.

Maersk turnover between January and December of last year reached 51,065 million dollars (47,423 million euros), 37.4% below the income recorded in the previous year and the lowest business volume of the group since 2020, including a 34% drop in revenue in the fourth quarter, to 11,741 million dollars (10,904 million euros).

The income of the maritime freight division decreased by 47.7% in the year, to 33,653 million dollars (31,253 million euros), while the logistics business reduced its turnover by 3.5%, to 13,916 million dollars (12,923 million euros), and the terminal division 12%, up to 3,844 million dollars (3,570 million euros).

During the fourth quarter of 2023, the company carried out a total cash distribution to shareholders of 771 million dollars (716 million euros) from share repurchases, which throughout the year amounted to 3,100 million dollars (2,879 million of euros).

However, “given the heightened uncertainty”, Maersk’s board of directors has decided to immediately suspend the share buyback program with the intention of reviewing its restart once market conditions in the shipping division’s business improve. have stabilized.

“2023 was a year of transition after the extraordinary market boom caused by the pandemic,” said Vicente Clerc, CEO of the company, who defended the “solid” results despite the fact that circumstances changed significantly.

“We are well positioned to manage the expected headwinds in 2024,” said the Maersk executive, who in November announced an adjustment of 10% of its workforce, about 10,000 workers, to reduce its costs by 600 million dollars (557 million of euros).

In this sense, the top executive of the Danish company warned that, although the Red Sea crisis has caused immediate capacity limitations, causing a temporary increase in rates, eventually the excess supply in transport capacity “will generate pressure on prices and will impact results.

In this way, the multinational predicts that in 2024 global container volume growth will be in a range of 2.5% to 4.5% and that Maersk will grow in line with the market, warning that it expects the significant challenges of excess supply in the ocean industry will be fully realized during the course of the year.

In this sense, the Danish company anticipates an adjusted gross operating result (Ebitda) of between 1,000 and 6,000 million dollars (928 and 5,572 million euros) for the current year.

“There remains significant uncertainty around the duration and extent of the Red Sea disruption, with a duration of one quarter to a full year reflected in the forecast range,” the company warns.

Separately, Maersk’s board of directors has decided to initiate the spin-off of the company’s towing business, a transaction that will be tax-exempt for tax purposes in Denmark.

In this way, the activities in Svitzer and its subsidiaries will be contributed to a new company with the legal name Svitzer Group, whose shares will be distributed pro rata among Maersk shareholders and are expected to be admitted for trading and official listing on Nasdaq Copenhagen.

“After evaluating the different options for Svitzer, Maersk has concluded that Svitzer, as an independent listed entity, is the best option for the company and for the creation of long-term value for Maersk shareholders,” he explained. the company.

Subject to the approval of Maersk shareholders at an extraordinary general meeting to be held at the end of April, the planned first day of trading and official listing of Svitzer Group shares on Nasdaq Copenhagen is April 30, 2024.