The opening quarter of 2019 has been eventful for CMA CGM, or as the company describes it; “the Group has undertaken a number of strategic moves in recent months”.
Most notable is the purchase of CEVA, in which the French company now owns 99.4% of the equity. Although CEVA remains a separate entity in the short term, CMA CGM have already taken strong actions to integrate it into the wider CMA CGM Group. For example, an ‘operations centre’ has been established in Marseille, presumably adjacent to CMA CGM’s headquarters. Why this is necessary is unclear, however the company describes it as being part of “a new, stronger governance structure”. It also appears that there has been a change of CEO as the company has stated that “Nicolas Sartini becomes Chief Executive Officer as of June 1, 2019 tasked with implementing CEVA’s turnaround plan and returning it to profitability”.
The rest of the group has also embarked on a refocus of management, with a rationalisation of the structures and branding of ANL and APL Lines. The hope is that this will save US$1.2bn.
As for the performance of Group as a whole, the driver is still the container shipping business. Stripping out the effects of the CEVA acquisition, profits edged downwards, with EBITDA at US$212m in Q1 2019 as compared to US$217m in the same period last year. Container volumes increased 4.4% year-on-year with revenue being roughly similar although the company said that revenue per container drifted upwards. Container shipping related costs were “contained”. Possibly, this is not a bad performance in what was a tough market.
The management betrayed a degree of nervousness about the container market, commenting that it would “continue to closely monitor current geopolitical tensions and the evolution of oil prices” whilst proceeding “with its transformation, strengthen its performance, accelerate its profitable development”.
It will be interesting to see how the integration of CEVA proceeds and what impact it will have on the evolution of CMA CGM as a whole.
Source: Transport Intelligence, May 30, 2019
Author: Thomas Cullen
