CMA CGM posts US$109 million quarterly loss as revenues fall

Time: 2016-09-05 13:46
FRENCH shipping giant CMA CGM's second quarter net loss stood at US$109 million against last year's quarterly profit of $156 million. This year's result was drawn on revenues of $3.3 billion, down 18.6 per cent year on year.
"We are experiencing a market environment that remains difficult, with excessively low freight rates weighing on our revenue and margins," said company vice chairman Rodolphe Saade.
The takeover of Singapore's Neptune Orient Lines, and its principal container carrying asset, APL, whose contribution was not included in the quarterly results, will make its positive impact felt in future, he said.
"We are working to improve operating performance, notably via the launch of the Agility plan, which includes a programme to reduce costs by $1 billion over the next 18 months, and in addition to the post-acquisition synergies with NOL," said Mr Saade.
Excluding NOL's contribution, freight carried by CMA CGM increased 0.2 per cent year on year to 3.3 million TEU.
Volumes rose slightly on the North-South lines, but declined on the East-West lines. Including NOL, which was consolidated since June 14, total volumes carried for the period amounted to 3.5 million TEU.
Average revenue per TEU, excluding NOL, fell 18.8 per cent year on year and by six per cent quarter to quarter, reflecting the persistent pressure on freight rates.
"The company kept a tight rein on costs, helping to drive a 10.7 per cent reduction in unit costs thanks to the combined impact of lower bunker prices and disciplined expense management," said the CMA CGM statement.
Core EBIT ended the period at a negative $66 million, excluding NOL, and a negative $81 million as reported. Excluding NOL, the net loss stood at $109 million.
After acquiring NOL, CMA CGM has consolidated the Singapore-based company since June 14. By June 30, the total stake had risen to nearly 93 per cent.
Since then, a compulsory acquisition process has been initiated, which will result in CMA CGM owning all of the company's outstanding shares. Subsequently, as previously announced, NOL will be delisted.
"APL will now serve as the core brand alongside CMA CGM on the transpacific, transatlantic and Asia-Gulf lines. ANL will be repositioned on the Asia-Oceania trade. Reorganisation of the APL and CMA CGM lines will be further improved when Ocean Alliance is implemented next April," said the company statement.
Work is continuing for the start-up of the Ocean Alliance operating partnership with Cosco Container Lines, Evergreen Lines and Orient Overseas Container Lines, said CMA CGM.
The alliance is scheduled to start operating in April 2017, once the regulatory approvals have been granted. Like the other CMA CGM subsidiaries, NOL will be part of Ocean Alliance from the beginning.
Jamaica's Kingston Containers Terminal concession has come came into effect on July 1. The hub, which will be expanded, is to accommodate vessels on Central America-Caribbean lines outbound from the newly widened Panama Canal, said the statement.

CMA CGM, the world's third biggest container line after Maersk and MSC, operates 532 vessels that call more than 420 ports. In 2015, it carried 18 million TEU. The group employs 29,000 people worldwide, including 2,400 in its headquarters in Marseilles.

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