The Danish shipping conglomerate Maersk painted a grim picture on the state of its industry and warned about potential changes to trade policy.
On Friday, the company said its second-quarter earnings were unsatisfactory, even though it escaped a loss.
Its profit tumbled from $1 billion a year ago to $100 million. It cited lower prices for oil, freight shipment, and tanker charters as reasons for the decline.
“Currently we are challenged by market headwinds, as I started out talking about, in the form of low growth and excess capacity in both our industries and that has led to declining prices and declining revenue,” said group CEO Søren Skou during the earnings call.
Separately, Maersk CFO Trond Westlie warned that a change in US trade policy could damage global trade, according to Bloomberg.
Republican presidential nominee Donald Trump has proposed negotiating America’s trading relationship with China to keep jobs and factories from moving overseas.
The company said it outperformed relative to its industries in the second quarter, achieved in huge part by cost cuts. But its updated outlook underscores that its industry continues to be slammed by the declines in commodities and shipping activity.
It expects 2016 profits to be “significantly below last year” at $3.1 billion. Maersk Line, the container-shipping company, also expects results to be worse year-over-year. The container-terminal, drilling, and shipping-services businesses are forecast to decline.
Maersk Oil now expects positive earnings for the year, upgraded from a Q1 estimate for breakeven and the only upwardly revised forecast.
To deal with the industry-wide downturn, Maersk is also exploring strategic options that could involve selling some parts of the company. According to Reuters, the company is fighting to keep its No. 1 position as mergers and acquisitions create bigger competitors.