CMA CGM posts first quarter profit of US$48m

CMA CGM posts first quarter profit of US$48m
The company managed a "contained decrease" in revenue

CMA CGM delivered a net result of US$48m in the first quarter of the year, aided by cost control, capacity reductions and terminal sales, which helped to offset a 4.6% drop in volumes.

During Q1, the company adjusted its deployed capacity in response to evolving market conditions, related to the COVID-19 pandemic, while its operating margin increased to 13.5%.

Rodolphe Saadé, chairman and CEO of CMA CGM Group, said: “The good results of the first quarter demonstrate the strength and the resilience of the Group.

“During this unprecedented crisis, our customers have been able to rely on our agility, the expertise of our teams and the complementarity of our logistic and maritime offers, in order to ensure the continuity of their supply chains.”

Revenue totalled US$7.19bn, with the French company attributing the “contained decrease” to the diverse range of industries the group’s customers operate, a balanced global presence and the complementary nature of its shipping and logistics activities.

Recently, the company confirmed the disposal of a first portfolio of eight port terminals to Terminal Link for a cash amount of US$815m.

The sale contributed US$185m towards the quarterly net result, helping the company significantly improve from its US$43m loss in the equivalent quarter in 2019.

The sale of two additional terminals covered by the agreement between CMA CGM and China Merchants Port (CMP) should be closed by this summer.

Shipping volumes were particularly impacted by the shutdown of factories, particularly in Asia in February and March, while revenue per carried container improved slightly, due mainly to the application of fuel surcharges.

Saadé added: “Despite the uncertainty around global economy, we anticipate an improvement during the second quarter, thanks to our operational flexibility and our discipline in terms of cost control.

“The current situation reinforces our conviction that it is essential to develop better balanced economic exchanges, whilst respecting the environment. We have set carbon neutrality by 2050 as our objective and we are ready to face future challenges.”

The company has recently launched a new phase in CEVA Logistics’ plan to return to profitability, featuring the revitalisation of business development, cost reductions and modernisation of industrial assets and systems.

“The COVID-19 crisis has confirmed the relevance of our strategy consisting in offering complementary maritime transport and logistics services, namely CEVA Logistics’ commercial offering, particularly in terms of air freight and warehousing,” noted a statement from CMA CGM.

During the quarter, CEVA Logistics’ revenue increased by 0.6% to US$1.71bn, due primarily to the consolidation of CMA CGM’s logistics activities in May 2019.

The group has recently secured a €1.05bn (US$1.19bn) loan, which is guaranteed up to 70% by the French state, as part of the government’s response to the COVID-19 crisis.

CMA CGM also reiterated its strategy which features four objectives including controlling every stage of the supply chain to offer end-to-end solutions to its customers and promoting the regionalisation of trade which accounts for a growing portion of the business.

Other key elements are driving the digital transformation of shipping and the logistics industry and accelerating the industry’s energy transition.