Maersk lifts earnings outlook after "strong" third-quarter results

Investing.com -- 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 said 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 top consensus forecasts, analysts at UBS noted.

Earnings before interest and taxes are also seen at $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 as well, while global container market volumes are now estimated to grow by around 6% versus a previous projection of 4% to 6%.

The revisions come after attacks by Iran-backed Houthi militants on vessels in the crucial Red Sea shipping corridor 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, the UBS analysts said the benefits from the congestion will likely be "temporary".

"Going forward we believe the current elevated levels of the freight rate will likely come down in [fiscal year 2025], as we expect the industry to head into a period of overcapacity," the analysts wrote.

More details about Maersk's near-term outlook are expected to be unveiled when the company posts its full third-quarter results on Oct. 31, analysts at Citi said.

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

Source: Investing.com