CMA CGM: Higher volume, lower profit in 2015

CMA-CGM-Kerguelen

CMA CGM’s revenue and profit slipped last year despite a 6.3 percent volume increase, but the French carrier said it’s counting on cost cuts and the pending acquisition of NOL to overcome a “tough” start to 2016.

“Growth in the container shipping market will continue to be dependent on global macroeconomic trends. The beginning of 2016 is tough and marked by freight rates under pressure, which will impact industry profitability,” CMA CGM said.

CMA CGM’s consolidated revenue dropped 6.4 percent last year, to $15.7 billion, despite an increase in volume to 13 million 20-foot-equivalent units from 12.2 million TEUs in 2014.

CMA CGM’s core earnings before interest and taxes, which excludes vessel disposals and impairment charges, fell 6.4 percent, to $911 million, but the company’s core EBIT margin was flat at 5.8 percent. Consolidated net profit declined 2.9 percent, to $567 million. As in 2014, CMA CGM benefited from currency exchange rates.

Rodolphe Saade, the company’s group vice chairman, said the company’s volume growth outpaced the market and is expected to continue doing so. He said CMA CGM’s operating performance “illustrates the strength of our business model and our capacity to adapt.”

Saade said CMA CGM will continue to cut costs, and that the planned acquisition of NOL and its APL container shipping unit “is progressing in line with expectations. Combined with our intrinsic capacity to deliver solid operating results, this project will make us more competitive going forward.”

CMA CGM said its volume growth last year was led by expansion of the carrier’s Ocean Three Alliance with China Shipping and United Arab Shipping Co., and expansion in the U.S. market, where CMA CGM plans to deploy six 18,000-TEU ships on the trans-Pacific trade.

2015 2014 Change %
Revenue, in $ billions 15.7 16.7 -6.4%
Core EBIT*, in $ millions 911 973 -6.4%
Core EBIT margin 5.8% 5.8% 0.0pt
Consolidated net profit Group share, in $ millions 567 584 -2.9%
Return on invested capital 9.2% 9.9% -0.7pt
Volumes carried, in TEU** millions 13.0 12.2 +6.3%
Vessel fleet 471 445 +26.0
Fleet capacity, in TEU** millions 1.893 1.649 +14.8%
Gearing 0.65 0.55 +0.10

*Core EBIT before disposals and impairment charges
**TEU = twenty-foot equivalent units

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