European stock markets experienced a "Black Thursday" as a wave of disappointing earnings reports from several industry giants severely dampened market sentiment. Across sectors from shipping and automotive to telecommunications, core companies not only reported results below expectations but also issued pessimistic profit guidance, triggering heavy selling of their shares.
Global shipping leader Maersk saw its stock plunge by as much as 7% after the company warned that freight rates are deteriorating as Red Sea routes gradually reopen. Maersk projected its profits for the year would be roughly halved compared to 2025, guidance that fell significantly below analysts' consensus expectations and directly sparked concerns about the global trade environment.
The automotive and telecommunications sectors were also not spared. Volvo's stock price tumbled 14%, marking a dismal performance, as its fourth-quarter revenue missed targets, with tariff pressures and intense price wars severely eroding profit margins. Concurrently, telecommunications giant Vodafone Group PLC saw its shares fall 4.6% due to weak service revenue growth in its largest market, Germany, indicating ongoing challenges for the transformation plan being implemented by its CEO.
Maersk's profit guidance was significantly reduced. According to reports, Maersk stated on Thursday that it expects underlying EBITDA for the year to be between $4.5 billion and $7.0 billion. This figure is not only far below the $9.53 billion recorded in 2025 but also falls short of the analyst average estimate of $5.76 billion.
Maersk indicated that the downgrade in guidance is primarily based on the expectation that Red Sea routes will progressively reopen. Previously, due to attacks by Houthi forces, the container shipping industry rerouted around the southern tip of Africa, requiring additional transit time. This effectively reduced global shipping capacity by approximately 7% to 8% amid fierce competition for cargo. However, as the Red Sea situation evolves, the freight rate benefits are fading.
Facing a challenging market environment, Maersk announced a focus on cost discipline. The company plans to cut 1,000 jobs, equating to about 15% of its corporate function roles but less than 1% of its total workforce. The company expects these measures to achieve annual cost savings of $180 million. Additionally, Maersk forecasts global container trade growth of 2% to 4% for the year.
Data from industry consultancy Alphaliner shows that the top five global container shipping lines have new vessel orders scheduled for delivery in the coming years totaling nearly 7 million TEUs, representing about 20% of the current global fleet, signaling significant pressure on the supply side.
Volvo faced margin pressures during a difficult quarter, with its stock plummeting 14% following the earnings release. Impacted by tariffs, increased discounts, and a stronger Swedish Krona, the company's fourth-quarter profitability was severely hampered, with its EBIT margin reaching only 2%, and operating income also falling short of analyst forecasts.
The company's CEO stated bluntly in an interview, "We are facing a very tough market." He noted that the removal of EV incentives in the US is hindering sales. To counter EU import tariffs on electric vehicles, Volvo has had to adjust its production footprint, shifting output to plants in South Carolina and Belgium.
Despite the disappointing annual performance, Volvo has set a target to achieve higher sales and free cash flow by 2026. The CEO emphasized that new models, including the EX60, are central to its turnaround efforts. This electric SUV has reportedly received "very successful" initial orders and is seen as a new beginning for the company in the all-electric segment.
Vodafone Group PLC reported third-quarter organic service revenue growth that missed expectations, leading to a share price decline. According to data, group-wide organic service revenue grew 5.4%, below the analyst estimate of 6.03%.
In Vodafone's largest market, Germany, organic service revenue grew a mere 0.7%, missing the analyst forecast of 1.02%. Although the addition of 1&1 AG as a wholesale customer boosted sales, and the impact of a regulatory change in Germany prohibiting housing associations from bundling TV packages has largely ended, fierce market competition continued to weigh on performance. Furthermore, organic service revenue in the UK market declined by 0.5%, significantly worse than the expected growth of 1.59%.
The CEO has been implementing an ambitious transformation plan for over two years, focusing on simplifying operations and asset disposals, including exiting the Italian and Spanish markets and pursuing a merger with Three UK, owned by CK Hutchison Holdings, in its home market. While analysts have praised the strategy of focusing on fewer key markets, the latest earnings report indicates that the path to growth recovery in core markets remains long.
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