Suspension of stock buybacks amid Red Sea turmoil

Maersk said it expects earnings before interest, taxes, depreciation and amortization (or earnings before interest, taxes, depreciation and amortisation) to range between $1 billion and $6 billion this year, compared to the $9.6 billion recorded in 2023.

Shares were trading down 14.2% at 8:30 a.m. London time.

“The impact of this situation is causing new uncertainty about how this will play out from an earnings perspective throughout the year,” CEO Vincent Clerc told CNBC's “Squawk Box Europe.”

He added: “We have little visibility into whether this situation will resolve within weeks or months, or whether this will continue with us throughout the entire year.”

The company added in a statement that its board of directors had decided to “immediately suspend the share repurchase program, with reconsideration re-initiating once market conditions improve.” [division] “They settled down.”

This comes as the company reported lower-than-expected fourth-quarter earnings on Thursday, with EBITDA for the three-month period falling to $839 million versus the $1.13 billion analysts had expected.

Global supply chains have faced serious disruption since late 2023 after major shipping companies began diverting their flights away from the Red Sea following a series of attacks by Houthi rebels in Yemen.

The Iran-aligned movement targeted commercial ships with drones and missiles in what it says is an act of solidarity with the Palestinians amid the ongoing war between Gaza and Israel.

Diversions around one of the world's busiest shipping lanes have increased delivery times and costs, with the Organization for Economic Co-operation and Development warning on Monday that they could increase inflation.

The Paris-based group said the recent 100% rise in sea freight rates, if it persists, could lead to import price inflation across its 38 member countries rising by about 5 percentage points.

The rerouting has increased freight rates for shippers, but Clerk said those increases are unlikely to lead to profits.

“I don't think from a profit perspective, either for the industry or for Maersk, when you look at it as a whole, this is going to be something where we make significant profits out of this situation,” he said.

“It is still unknown how much it will cost us to keep the global supply chain going today.”