Maersk Upgrades Profit Forecast Amid Strong Q3 Results

Copenhagen-listed shares in AP Moeller – Maersk A/S B (CSE:MAERSKb) edged higher on Tuesday after the Danish shipping giant increased its full-year core profit outlook thanks to "strong" third quarter results.

In a preliminary earnings release on Monday, Maersk indicated that it now expects to post annual underlying income before interest, taxes, depreciation, and amortization (EBITDA) of $11.0 billion to $11.5 billion, up from its prior guidance of $9 billion to $11 billion.

Both the midpoint of this range and the implied fourth-quarter EBITDA of $2.7 billion exceed consensus forecasts, according to analysts at UBS.

Earnings before interest and taxes are also projected to be $5.2 billion to $5.7 billion, compared to earlier estimates of $3 billion to $5 billion. Maersk raised its forecast for free cash flow by $1 billion to at least $3 billion, with global container market volumes now estimated to grow by around 6%, up from a previous projection of 4% to 6%.

These revisions come in the wake of attacks by Iran-backed Houthi militants on vessels in the crucial Red Sea shipping corridor, which led to a re-routing of shipments, driving freight rates higher and causing traffic snarls at ports in Europe and Asia.

In a note to clients, UBS analysts suggested that the benefits from this congestion may be "temporary." They expect that elevated freight rates will likely decline in fiscal year 2025, as the industry heads into a period of overcapacity, they wrote.

More details about Maersk's near-term outlook are expected when the company releases its full third-quarter results on Oct. 31, as noted by analysts at Citi.

Maersk reported preliminary revenue of $15.8 billion for the third quarter and adjusted EBITDA of $4.8 billion, both exceeding expectations.