CMA CGM improved its profitability in the second quarter of 2020 despite lower volumes amid the COVID-19 pandemic as it adapted fleet capacity to demand to increase freight rates. It is forecasting even better financial results in the third quarter.
The French container shipping liner posted a net income of US$136 million in the second quarter, coming from a loss of $109 million during the second quarter of 2019.
EBITDA improved 26.3% year-on-year to reach more than $1.2 billion, while the EBITDA margin posted a double digit gain of 17.2% versus 12.4% during the second quarter of 2019.
Group revenue for the period reached $7.0 billion, down 9.0% compared with the second quarter of 2019, due to a slowdown in volumes as the global public health crisis disrupted international trade.
“Despite the COVID-19 pandemic, our Group reported excellent results during the 2nd quarter, thus strengthening our financial structure,” said Rodolphe Saadé, group chairman and CEO.
He attributed the outcome to “our agile business model and synergies between our shipping and logistics business activities” to adapt its service offerings to its customers’ fast-changing needs. “We have also significantly reduced our costs and benefited from the drop in oil prices,” he said.
In the shipping segment, CMA CGM carried volumes that were 13.3% lower compared with the second quarter of 2019, reducing revenue for the quarter by 10.9% from the same period a year ago. Shipping revenue totaled $5.3 billion as average revenue per TEU rose 2.8% year-on-year.
Net income rose 213% to $145 million from a loss of $68 million in the second quarter of 2019. Shipping EBITDA grew by 30% compared to a year ago, while the operating margin was up 86% to $497 million.
The logistics segment, meanwhile, reported a drop of 4.7% in revenue for the second quarter at $1.7 billion. EBITDA increased to $153 million, up 4.1% compared with the second quarter of 2019. These results benefitted from the strong airfreight business thanks to air charters compensating for the absence of regular capacity, said CMA CGM. The operating margin grew by 78% to $40 million.
Logistics net loss reached $1 million compared with a net loss of $32 million during the second quarter of 2019.
Looking ahead, CMA CGM said the recovery in container shipping seen since April should continue during the third quarter of 2020 for most routes, driven by faster recovery in the consumption of goods than of services, the growth of e-commerce, and usual seasonality.
“These factors recently drove freight rates to historically high levels, in particular on transpacific routes where the Group is the world leader,” it said.
Despite the uncertainties, the company said it is confident about its business outlook for the third quarter of 2020: “The current strong momentum of the shipping market, driven by both volumes and freight rates, should allow the Group to further significantly improve its operating margin compared with the second quarter.”
