Sun | Oct 22, 2017

CMA CGM second quarter profit up 67%

Published:Tuesday | September 1, 2015 | 11:04 PMMcPherse Thompson

Shipping group CMA CGM of France has recorded a 67 per cent increase in net profit for the second quarter ended June 2015, according to its financial results released on Monday.

The group said it demonstrated the strength of its business model by significantly outperforming the market, despite a sharp fall in freight rates and industry overcapacity.

Volumes carried during the second quarter increased by 6.2 per cent year-on-year to 3.3 million twenty-foot equivalent units (TEUs), compared to global market volume growth of between one per cent and two per cent, according to the results posted on its website.

Average revenue per container carried decreased by 7.8 per cent. However, that was significantly less than benchmark indices for the period due to the broad diversity of the Group's customers and lines.

Unit costs fell 10.9 per cent largely due to the sharp fall in oil prices. Core earnings before interest and tax - EBIT - surged 59.3 per cent compared to the second quarter of 2014 to US$325 million, as the group's lower unit costs outpaced the decline in average revenue per container carried. Consolidated group net profit amounted to $156 million, up 66.7 per cent on the second-quarter of 2014.

For the January to June period, volumes were up 8.2 per cent to 6.4 million TEUs, revenue was stable at US$8.1 billion and net profit almost tripled to US$562 million.

CMA CGM further strengthened its financial position with adjusted net debt representing less than 50 per cent of consolidated equity.

In May, Moody's upgraded the group's credit rating to B1 with a positive outlook.

In June, CMA CGM extended the maturity of its debt with the issuance of a EU725 million bond maturing in 2021. The issuance allowed CMA CGM to refinance in anticipation of outstanding bonds maturing in 2017 and 2019.

"During the second quarter, the group continued to upgrade its services in fast-growing markets and to adapt its offering with the aim of unlocking growth potential and better meeting the needs of its customers," the company said.

It reported vigorous growth in its lines to and from the United States, reflecting, among other factors, the weakness in the euro, which boosted European exports to the US and in reefer cargoes.

CMA CGM will be operating the Kingston Container Terminal, under a 30-year concession, which the French company said would become its regional hub for the Panama Canal expansion scheduled for completion in 2016. The deal with Jamaica is subject to financial close later this year.

Two new 9,400-TEU vessels joined the group's fleet: CMA CGM Tage and CMA CGM Thames. Those vessels are designed to operate within the expanded Panama Canal and are currently positioned on fast-developing lines. During the period, the Group also took delivery of CMA CGM Kerguelen and CMA CGM Georg Forster, the first two vessels in the 18,000-TEU series.

The group continued to develop its logistics subsidiary CMA CGM LOG, with the acquisition of a 60 per cent stake in LCL Logistix, a logistics leader in India, and the signature of a framework agreement regarding a new logistics platform in Cuba.

In July, CMA CGM signed two major agreements in Marseille - a US$1 billion financing solutions framework agreement with Chinese bank CEXIM and a partnership with China Merchants (CMHI) as part of China's 'One Belt, One Road' programme, a strategic initiative backed by the Chinese government to develop infrastructure and logistics projects.

Since July, CMA CGM has taken delivery of two 2,100-TEU vessels deployed on lines to Guyana, along with a 9,300-TEU and 18,000 TEU vessel.

In the coming weeks, the company will take delivery of one 2,100-TEU vessel, one 9,300-TEU vessel, and two 18,000-TEU vessels, including CMA CGM Bougainville, set to become the largest container ship sailing under the French flag.

Also in July, the group closed the acquisition of OPDR, a shipping company specialising in intra-European multimodal solutions, after the transaction was cleared by the European Commission. OPDR will help solidify the market position of subsidiary MacAndrews, which is already active in this segment. CMA CGM Group also obtained the container terminal concession of Kribi, Cameroon for 25 years.

The company says it expects freight rates "to remain particularly volatile for Asia-Europe and Asia-Mediterranean lines" during the third quarter.

mcpherse.thompson@gleanerjm.com