CMA CGM and OOCL both suffer in 2016 but the former sees a more certain recovery

CMA CGM concentrated on profits rather than market share over 2016, looking to strengthen the company financially whilst it absorbed NOL/APL, yet despite losses it appeared to finish the year on an optimistic note. OOCL results however, whilst also seeing losses, saw less of a recovery in the latter part of the year.

At CMA CGM, the number of TEUs (twenty-foot equivalent units) carried rose by 20.4% to 15.6m, however stripping out the contribution from NOL/APL, volumes fell by 1.3% to 12.8m. Revenue also saw a marked underlying fall of 14.7% compared to 2015. Including the NOL/APL acquisition CMA CGM had a revenue of US$16bn, just 1.9% higher year-on-year. EBIT was worse, falling into a loss of $99.9m compared to last year’s positive result of $895m although CMA CGM assert that “core” EBIT remained positive to the tune of 28.9m.

Certainly the results appear to be improving towards the end of the year, with “core” EBIT seeing a positive result at $174m, a performance that Rodolphe Saadé, CMA CGM’s CEO, thought was “one of the best performances in the industry”.

Hong Kong-based liner OOCL also had a harsh year, with revenue down and operational profits turning negative at a loss of US$138m, compared to 2015’s $353m profit. As seen through much of the rest of the sector, volumes rose significantly to 6m TEUs, up from 2015’s 5.57m TEU, however, as the company’s Chairman, C C Tung, commented, “for the full year 2016, OOCL’s liftings were up 9.1%, but with a drop in revenue of 9.9%”. In contrast with CMA CGM, OOCL did not see much of a recovery in the latter part of the year as, in words of Tung, “fuel prices rose in the second half of the year, industry performance was badly affected by freight rates that frequently sank below the levels seen in 2009”.

The view of the future of the two shipping companies differed in emphasis, with Tung observing that “expectations for net growth in 2017 suggest improvement in the situation, but time may be needed to absorb the existing supply overhang”. Saadé was more bullish, commenting that “the market is expected to continue its recovery”.

Source: Transport Intelligence, March 16, 2017

Author: Thomas Cullen