CMA CGM sails through first quarter crisis

CMA CGM S.A. is another logistics service provider that has appeared to get through the past quarter, if not unscathed, then with only a moderate amount of pain. This is a little surprising in the light of the rather large credit facility granted to the company by the French government.

In its latest numbers, published on Friday, the France-based shipping company that now includes the forwarder and contract logistics provider, CEVA, saw revenue fall 3% year-on-year but EBITDA (Earnings before interest, tax, depreciation and amortisation) rise 24.9% to US$973m before the disposal of assets is accounted for. The end result was a near doubling of net income to $48m, a number only in the black due to the sale of a string of container terminal assets. Debt is an issue for CMA CGM and its servicing depresses profits considerably although it should be noted that the company’s cash flow position strengthened in the quarter.

The core shipping business was hit by the economic crisis, but not as badly as might be expected. The numbers of containers carried fell by 4.6%, but revenue fell only 3.3% to $5.52bn.

The CEVA contract logistics and forwarding business also had stable performance, with revenue edging up by 0.6% although ‘adjusted’ EBITDA fell by 4.9% to $137m. In reality, CEVA experienced considerable volatility in its markets, with key customer groups such as the automotive sector hit hard whilst air chartering experienced a boom.

Of course, the real problems will appear in the second quarter as this is when the most significant disruptions in western markets occurred. Michel Sirat, the Chief Financial Officer of CMA CGM admitted this, commenting that “I think that the second quarter will be the low point”, suggesting that container volumes will fall by 15% in this period.

None-the-less, bearing in mind the market conditions both the CMA CGM shipping line and CEVA have shown surprising robustness. This is unlikely to be just operational vigour, it also reflects a cautious strategic positioning, something that makes the management of the Group’s considerable debt burden a more hopeful prospect.   

Source: Transport Intelligence

Author: Thomas Cullen