- Company says steps are needed to maintain market position
- Shares rise in Copenhagen as investors welcome strategy
A.P. Moeller-Maersk A/S is scaling back capacity and cutting jobs in the world’s largest shipping line to adapt to a drop in demand.
The Danish company, which last month lowered its profit forecast for 2015 citing a gloomier outlook for the global shipping market, will shed 4,000 jobs in its Maersk Line unit as part of a program to “simplify the organization,” it said in an e-mailed statement on Wednesday.
Shares in the company rose as much as 2.9 percent after the open and traded 2.4 percent higher at 10,360 kroner as of 9:08 a.m. in Copenhagen.
“In light of the lower demand these initiatives will allow Maersk Line to deliver on the ambition to grow at least in line with the market to defend the market leading position,” the company said.
Maersk Line, which is also postponing investments as part of the plan, says the measures will cut its cost run-rate for annual sales, general and administration tasks by $250 million. In 2016, the impact will be $150 million, it said.
The cost cuts “will show Maersk is back at what they’ve always been good at: focusing on costs and execution and usage of ships,” said Stig Frederiksen, an analyst at Nordea. “No doubt the market will receive that very positively.”
Maersk, which on Oct. 23 said it sees underlying profit of about $3.4 billion in 2015 versus an earlier forecast for $4 billion, is due to report third-quarter earnings on Nov. 6. Maersk also recently announced it will cut up at 12 percent of its workforce in its oil unit as part of a plan to reduce costs by 20 percent by the end of next year.