August 7, 2018 / 2:46 PM / a month ago

Denmark's Maersk cuts 2018 guidance, eyes market recovery

COPENHAGEN (Reuters) - Danish shipping company A.P. Moller-Maersk slashed its 2018 earnings forecast on Tuesday due to weak second-quarter freight rates and higher prices for bunker fuel, although the downgrade was smaller than feared, analysts said.

FILE PHOTO: Container ship Maersk Binta sails in the Bosphorus in Istanbul, Turkey July 27, 2018. REUTERS/Osman Orsal/File Photo

The world’s biggest container shipper also said spot freight rates have restored after a significant drop in the second quarter, and that its volumes are growing in line with the market.

Following the unexpected announcement, Maersk’s share price initially fell more than 5 percent but shortly after rose to trade 4.6 percent higher for the day at 1409 GMT.

The company now expects earnings before interests, tax, depreciations and amortisation (EBITDA) of between $3.5 billion and $4.2 billion, down from $4.0 billion-$5.0 billion seen previously.

A Thomson Reuters I/B/E/S SmartEstimate forecast showed however that analysts had already slashed expectations for Maersk’s earnings to $3.69 billion ahead of the warning.

“Some people just sell immediately when they see a profit warning issued. But the market may have feared an even more dramatic profit warning,” Sydbank analyst Morten Imsgard said.

Maersk said it still expects a positive underlying profit, while it previously expected an underlying profit above the $356 million it reached last year.

Reporting by Teis Jensen, additional reporting by Emil Nielson, editing by Terje Solsvik

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