Maersk has made it clear that cost reduction is imperative, and Vincent Clerc has given the answer whether to lay off staff substantially
Layoffs are not imminent, but cost-cutting measures must be taken. On February 8, Maersk released the strongest financial report in history. The financial report shows that in 2022, Maersk will achieve extraordinary performance with full-year expectations, with revenue increasing by 32% to $81.5 billion and EBIT increasing by 57% to $30.9 billion. But at the same time, Maersk said that the slowdown in the global economy will lead to bad conditions in the market, especially in the shipping market. Against this backdrop, Maersk expects full-year 2023 EBIT of $2-$5 billion.
From last year’s EBIT profit of $30.9 billion to this year’s estimated EBIT profit of $2-$5 billion, Maersk expects this year’s profit to plummet by more than 90%, reflecting its extreme pessimism about this year’s market. Facing the European media, Maersk CEO Vincent Clerc said: layoffs are not imminent, but now is the time to introduce cost-saving measures, because the Covid-19 market is over. Since September last year, the shipping giant has felt the impact of a general upturn in the freight market, with container volumes, demand, and prices all falling significantly, which is bound to have an impact on the shipping company.
Maersk predicts that revenue in 2023 will be significantly reduced by 70% compared to 2022. The company wants to grow, and cost reduction measures are also inevitable. “2022 is a very extraordinary year. We have broken the historical record of profitability in Denmark, but we have long been preparing for new challenges that have nothing to do with the favorable factors we are facing,” said Vincent Clerc at a news conference. It is reported that Vincent Clerc succeeded Søren Skou as CEO at the beginning of this year. Prior to this, Vincent Clerc served as the head of Maersk’s crucial container business, which accounted for 80% of the total revenue of $81.5 billion and 92% of the $36.8 billion EBITDA.
During the first three quarters of last year, Maersk reaped billions of dollars in an unstoppable container market, at the same time that the Russia-Ukraine war and the ensuing energy crisis suddenly hit the world. In addition, the lockdown measures imposed by China due to Covid-19 have hindered the production, export, and shipping of goods, and the frenzied buying of American consumers during Covid-19 has also ended. According to Maersk’s financial report, compared with the same period in 2021, the cargo volume of the three major trade lanes fell by 14%, and the average freight rate fell by 3.5%. Vincent Clerc said this means paying more attention to costs, which have surged during the Covid-19. Therefore, Maersk will work hard to reduce costs in order to avoid a very serious decline in operating performance.
