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CMA-CGM Group’s net income plunged 83% in the second quarter
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The results were amid “deteriorated market conditions in the transport and logistics industry,” the group said
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Group revenue dropped 36.9%—driven mostly by the Group’s shipping business
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Consolidated revenue from shipping operations reached $8.4 billion, down 47.9% from second-quarter 2022
CMA-CGM Group’s net income plunged 83% in the second quarter of the year to US$1.3 billion from $7.6 billion in the same quarter last year.
“First-quarter 2023 trends remained at play in the second quarter of 2023, with deteriorated market conditions in the transport and logistics industry,” the French shipping group said in a statement.
It added: “Macroeconomic forecasts for the second half of 2023 anticipate sluggish global growth given the persistent inflationary pressures weighing on consumer spending as well as the measures taken by central banks in response, and geopolitical uncertainties. In light of uncertain demand, new capacity arriving on the market is likely to weigh on freight rates in shipping, particularly on East-West lines.”
Group revenue stood at $12.3 billion in the second quarter—driven mostly by the Group’s shipping business—from $19.5 billion, a 36.9% drop.
EBITDA came to $2.6 billion, 73% lower year-on-year. EBITDA margin came in at 21.1%, down 28.1 points.
Financial resources net of debt totaled $3.8 billion at June 30, 2023, down $1,852 million from December 31, 2022.
Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, said: “As expected, our industry continued to normalize in the second quarter and, despite difficult market conditions, our performance remains robust. In recent years, we have significantly strengthened our two strategic pillars: transport and logistics. On that basis, our Group will pursue its transformation, as it continues to expand and to integrate recently acquired subsidiaries, while stepping up investments to decarbonize its activities”.
The “transport and logistics market remains depressed,” the group said, “despite a rebound in demand for transport in the second quarter of 2023 compared with the previous quarter, driven by a degree of macroeconomic resilience and lower energy prices.”
Consolidated revenue from shipping operations amounted to $8.4 billion, down 47.9% from second-quarter 2022.
EBITDA totaled $2.2 billion, 76% lower than in the prior-year period. EBITDA margin came in at 26.2%, down 30.7 points. Average revenue per TEU amounted to $1,491, down 10.3% year-on-year.
The group said volumes remained buoyant on the North-South lines, but the Transpacific and Asia-Europe lines were hit by the slowdown in household consumption and dealer inventory drawdowns.
In the second quarter of this year, the group carried 5.60 million TEUs, down 0.3% year-on-year despite an 11.5% rebound vis-a-vis the first quarter of the year, reflecting the seasonal nature of the business but also an upturn in demand.
Logistics
Revenue from logistics operations totaled $3.8 billion in the second quarter of the year, unchanged from the same period last year.
EBITDA stood at USD 356 million, a 4.7% increase on second-quarter 2022.
“The stability of the logistics business, in a context of declining trade, reflects both the slowdown in freight markets and the strengthening of the end-to-end supply chain services offered to CMA CGM Group customers through the acquisitions made since second-quarter 2022 of Ingram CLS, Gefco and Colis Privé,” the group said.
The declining market has impacted freight management activities.
“Contract logistics activities are recovering in Europe but remain generally affected by the weakness of the e-commerce segment, particularly in the United States. Finished Vehicle Logistics are performing well supported by favourable market dynamics due to the combination of persistent supply chain disruptions and strong demand,” the group said.
During the second quarter, the group submitted an offer to acquire Bolloré Group’s freight forwarding and logistics operations, which will strengthen CMA CGM’s logistics expertise in a wide range of high value-added sectors.
Other activities
Revenue from other activities, which include port terminals and CMA CGM Air Cargo, fell 5.3% to $474 million. EBITDA was $50 million, down 61.9%, mainly due to lower volumes in port terminals and a less buoyant air transport market.
The group said “financial results continue to return to normal as indicated in the previous quarter.”
The Group expressed confidence in its “ability to weather the cycle thanks to its combined transport and logistics strategy and its financial strength. Given the inflationary environment, we are being particularly vigilant about keeping operating costs under control.”
The Group said it continues to invest in supporting the energy transition for transport and logistics by:
- maintaining investments to diversify the energy mix with the aim of achieving Net Zero Carbon by 2050, with over $14 billion invested in a fleet representing more than 100 LNG- and methanol-powered ships; and
- creating CMA CGM’s Fund for Energies with a budget of €1.5 billion over five years. Outlays of €430 million have already been committed to accelerate the energy transition across the Group’s worldwide sea, land, air and logistics activities.
