CMA CGM Group’s revenue drops 42.6% in Q3

CMA CGM Group’s revenue drops 42.6% in Q3
  • CMA CGMGroup revenue dropped 42.6% in the third quarter to $11.4 billion due to tough conditions in transport and logistics
  • The shipping segment struggled with a 51.8% revenue drop to $7.6 billion mainly due to normalized freight rates although there was an uptick in volumes
  • Despite declining trade, the logistics sector remained stable, showing resilience in certain areas like contract logistics in Europe

CMA CGM Group revenues dropped 42.6% to $11.4 billion in the third-quarter from $19.9 billion in the same period last year amid challenging market conditions in the transport and logistics sector.

The decline underscores a strategic shift, showcasing a gradual rebalancing of contributions from maritime shipping and logistics businesses, the Group said in a statement.

The EBITDA for the same period came in at $2.0 billion, a 78.2% decrease compared to the third quarter of 2022. EBITDA margin declined 28.5 points to 17.5%.

Group net income amounted to $388 million from $7.039 billion, and the debt net of financial resources totaled $0.1 billion at September 30.

“The industry continued to normalize in the third quarter, with a return to pre-pandemic market conditions. Our performance remained very solid, confirming the relevance of our growth strategy in terminals and logistics. We are consequently more resilient as we enter this new cycle,” Rodolphe Saadé, the chairman and CEO, said.

The shipping segment faced challenges, with consolidated revenue declining by 51.8% to $7.6 billion year-on-year. The EBITDA for shipping operations also witnessed a substantial decrease of 81.6%, totaling $1.6 billion. The EBITDA margin stood at 21.0%, down 34 points.

Average revenue per TEU (twenty-foot equivalent unit) amounted to $1,322, a 52.3% decrease year-on-year. However, volumes carried increased by 0.9%, totaling 5.7 million TEUs. Notably, North-South and short-sea lines experienced growth, while East-West lines normalized due to inventory drawdowns in the United States and moderated household consumption.

In the logistics sector, revenue totaled $3.7 billion in the third quarter of 2023, with EBITDA standing at $348 million, reflecting a 3.0% decrease year on year. The stability in logistics operations during a period of declining trade was attributed to the slowdown in freight markets, alongside the strengthening of service offerings and the resilience of certain activities.

While freight management activities were impacted, contract logistics, particularly in Europe, held up well. Finished vehicle logistics activities also performed positively, buoyed by sustained demand and returning normalcy to supply chains.

Revenue from other activities, including port terminals and CMA CGM AIR CARGO, rose by 5.3% to $526 million. However, EBITDA witnessed a downturn of 58.4%, totaling $56 million.

The decrease was primarily due to the normalization of volumes in port terminals and a decrease in revenue from storage linked to congestions. Furthermore, the air freight market faced challenges with higher capacity against weak demand.

Looking ahead, the third quarter of 2023 confirmed the trend towards normalization in the transport and logistics markets, with a return to pre-COVID conditions, the Group said. Challenges such as inventory drawdowns and inflationary pressures persisted.

The big-picture view, it said, suggests that global economic activity will stay somewhat strong in 2023, though not as high as in the past, with no expected improvement in 2024. On the flip side, world trade is anticipated to bounce back in 2024, potentially continuing to impact freight rates.

In response to this challenging environment, CMA CGM said it emphasizes maintaining operating cost discipline, advancing its decarbonization policy, and effectively integrating strategic investments made over the last two years. The Group also remains vigilant to evolving geopolitical factors.

In August, the Group successfully completed its $2.8-billion acquisition of the GCT Bayonne and New York container terminals, rebranded as Port Liberty Bayonne and Port Liberty New York.

Additionally, CMA CGM continued its investments in the energy transition for shipping and logistics, aiming to achieve net-zero carbon by 2050. The Group has already invested over $17 billion in a fleet of nearly 120 LNG- and methanol-powered ships set to be delivered by 2027.

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