CMA CGM swings to profit on strong volume growth, higher freight rates

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The CMA CGM GEORG FORSTER in Hamburg

The CMA CGM group reverted to profit in 2017 following a loss the preceding year, driven by robust growth in container volumes, increase in freight rates, the contribution of APL’s services, and cost control.

In a statement, the Marseille-based global liner reported a consolidated net income for 2017 of US$701 million, a sharp increase compared to a loss of $452 million in 2016.

The group carried nearly 19 million containers, a surge of 21.1% compared to 2016. This increase was driven by the contributions of all the shipping lines operated by the group in addition to APL’s full-year contribution.

APL, integrated into the group in June 2016, carried more than 5 million TEUs in 2017 and contributed $340 million to the group’s 2017 operating income.

The statement linked the strong volume momentum to the Ocean Alliance service and to the trans-Pacific market, “where the CMA CGM and APL brands are particularly strong.”

Freight rates rose last year, propelling growth of 9% in average revenue per TEU compared to 2016.

Fourth-quarter revenues were up 19.9% compared to the same quarter last year and stood at $5.5 billion.

For the entire 2017, annual revenue rose by 32.1% and surpassed the $20 billion mark for the first time, reaching $21.1 billion.

In the last quarter, the operational result stood at $282 million. The core EBIT margin reached 5.2%, up by 1 point compared to the fourth quarter of 2016.

In 2017, CMA CGM core EBIT reached $1.575 billion with a core EBIT margin of 7.5%, up 7.3 points compared to the previous year.

“CMA CGM thereby recorded the best operating result in the container shipping industry,” said the statement.

In addition to the rise in average revenue per TEU transported, the control of unit costs, which rose slightly by 1.6%, despite the sharp rise in fuel prices enabled this particularly strong result.

“The Group has recorded an excellent performance in 2017, showing once again the relevance of its strategy and its operational discipline,” said group chairman and CEO Rodolphe Saadé.

“Quarter after quarter, CMA CGM demonstrates its ability to outperform its peers and these annual results confirm our Group’s position as a leading player in the container shipping industry.”

In 2017, the company launched several strategic projects fostering its development for the years to come, notably in the digitization of the industry, said Saadé.

In November, CMA CGM selected LNG to propel its nine new vessels of 22,000 TEUs, which are expected to be delivered from 2020 onward.

“This proactive choice will significantly reduce the emission of greenhouse gases and fine particles,” said the company.

Early this year, CMA CGM took delivery of its new flagship the CMA CGM Antoine De Saint Exupery, which at 20,600 TEUs in capacity is the largest container ship flying the French flag.

In April 2018, CMA CGM will launch a further improved offering with its “Ocean Alliance Day Two Product.”

The Ocean Alliance, the largest operational shipping alliance in the world with 40 services and more than 320 ships, was first launched April 1, 2017.

Looking ahead, CMA CGM said it expects the momentum of the volumes transported to continue in 2018.

“The Group should continue to benefit from this trend, thanks to its worldwide presence and its portfolio of brands covering the East-West, North-South and intra-regional trades.”