CMA CGM remains optimistic despite coronavirus

Despite challenges caused by the coronavirus pandemic, French container shipping major CMA CGM closed the first quarter of this year with a positive net result.

The company saw a net income of $48 million in Q1 2020, an increase of $91 million when compared to a net loss of $43 million suffered in the corresponding period a year earlier.

As explained, the result includes a $185 million gain from the disposal of port terminals to Terminal Link.

During the first quarter of 2020, in the context of a slowdown in world trade and a decline in carried volumes, CMA CGM Group revenues amounted to $7.19 billion, slightly down compared to the $7.41 billion recorded in the same period last year. 

Shipping revenue declined by 3.3 per cent compared to Q1 2019 to $5.52 billion. Volumes carried by CMA CGM decreased by 4.6 per cent compared to the first quarter of 2019 due to the impact of COVID-19 and more specifically the shutdown of factories, particularly in Asia in February and March. Nevertheless, revenue per carried container improved slightly, due mainly to the application of fuel surcharges.

The group’s operating performance improved significantly. Adjusted EBITDA for the group increased by 25 per cent to $973 million, equating to a margin of 13.5 per cent, up 3 percentage points relative to the first quarter of 2019.

During the quarter, CMA CGM strengthened its cash position with a syndicated loan of €1.05 billion ($1.1. billion). Signed with a consortium of three banks, the loan is 70 per cent guaranteed by the French State and is part of the scheme set up by the government in response to the COVID-19 crisis and validated by the European Commission.

Lockdown measures taken even more in Q2 2020 in response to the spread of COVID-19 around the world are weighing on global consumption and increase uncertainties. The group expects volumes to decline by about 10 per cent over the first half of the year. Operating performance for the second quarter, however, should show significant improvement thanks to the industry’s discipline and the group’s cost control policy, CMA CGM said.

CMA CGM said it has developed a range of commercial and digital solutions to adapt and protect its clients’ supply chains. Looking ahead, the group intends to maintain ‘a spirit of adaptation and innovation’ for the shipping and logistics of tomorrow with, in particular, the development of teleworking and the acceleration of digitalization in the industry.

The group intends to pursue and strengthen its strategy that relies on four major objectives — controlling every stage of the supply chain to offer end-to-end solutions to its customers; promoting the regionalisation of trade which accounts for a growing portion of the business; driving the digital transformation of shipping and logistics industry; and accelerating the industry’s energy transition.

In particular, the group is strengthening its commitment in favour of more balanced and environmentally friendly global trade. At a United Nations conference held on June 2, 2020, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, announced the group’s target to be carbon neutral by 2050.

Alternative fuels are expected to account for 10 per cent of the group’s fuel consumption by 2023. 2020 will mark a major step with the delivery of the first 23,000-TEU container ships powered by LNG, allowing to reduce CO2 emissions by about 20 per cet and eliminate nearly all sulphur and fine particle emissions.

“The good results of the first quarter demonstrate the strength and the resilience of the group… 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,” Rodolphe Saadé commented.

“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.“