August 7, 2023: On Friday, Shipping firm Maersk cautions of a sharp deceleration in international trade as it reports a profit decline but still beats market anticipations and elevated its full-year guidance.

It also warned of a deeper pullback in international shipping container demand. It now predicts volumes to decrease by as much as 4% versus a previous worst-case system of 2.5% as companies cut their inventories amid recession risks in Europe and the U.S.

The world’s second-largest shipping business, often seen as a bellwether for global trade, posted a second-quarter profit before interest, tax, depreciation, and amortization of $2.91 billion, well below the record $10.3 billion for the same quarter in 2022. According to the data, analysts had projected an EBITDA of $2.41 billion.

The company has long warned of a steep decline in earnings after an “exceptional” 2022 as the sky-high ocean cargo rates that powered it to record-breaking profits started to normalize rapidly.

Revenue sank by 40% annually, from $21.65 billion in the second quarter of last year to $12.99 billion, as container rates continued to fall and volumes remained weak due to “continued destocking, particularly in North America and Europe,” the company said in its report.

Maersk warned of a deeper pullback in global shipping container demand and predicts volumes to decrease by nearly 4% versus a previous worst-case scenario of 2.5% as companies cut their inventories amid slump risks in Europe and the U.S.

“The Q2 result contributed to a strong first half of the year, where we responded to sharp changes in market conditions driven by destocking and subdued growth environment following the pandemic-fueled years,” CEO Vincent Clerc said.

“Our decisive actions on cost containment, together with our contract portfolio, cushioned some of the effects of this market normalization. Cost principle will continue to play a central part in dealing with a subdued market outlook that we expect to continue until the end year.”

Maersk also narrowed its profit forecast for the entire year and now expects underlying EBITDA to come in between $9.5 billion and $11 billion, having earlier estimated a range of between $8 billion and $11 billion.

 Maersk claims declined 5% by mid-afternoon in Europe.