FREE BRIEF OF THE WEEK: CMA CGM shipping and CEVA business make profits and reduce debts
By Thomas Cullen, Ti
CMA CGM’s performance in 2020 was similar to its large competitors with moderate demand but strong profit growth. Revenue was up 3.9% year-on-year to $31.4bn, EBITDA leapt by 62.5% to $6.1bn and the company broke into a profit of $1.8bn, as compared to 2019’s loss.
As far as the container shipping business was concerned the story behind the recovery in profits was a now-familiar one. Although container volumes were volatile over the year and fell overall, this was more than compensated for by higher freight rates and ship utilisation.
For the year, the number of containers handled fell by 2.7% year-on-year although CMA CGM said that there was a “strong upturn in activity from May onwards, which partially offset the sudden drop at the beginning of the year”. Of course, the key element was the rise in freight rates which the company does not elaborate on, rather it says that average revenue per TEU rose 6.8% year-on-year resulting in a 4% rise. Revenue for the shipping business was $24.2bn and EBITDA was $5.9bn, up 71.1%. The conditions behind the jump in profitability are less clear, however, it is reasonable to suggest that the rationalisation of capacity and services enabled better use of capital assets.
The CEVA contract logistics and forwarding business also saw profits rise but not as vigorously. It seems much of the better performance was in air freight forwarding but CMA CGM comments that the contract logistics saw a recovery towards the end of the year due to “the reopening of sites that had to close during the second quarter due to the health crisis”. The CEVA business saw revenue rise 3.1% year-on-year to $7.4bn whilst EBITDA was $609m, up 11.9% on the previous year.
CEVA still makes a loss due to its substantial debt burden, however, net loss for the year was reduced by $56m, to $161m, but this number includes the early repayment of debt paper. Bearing in mind that the wider CMA CGM group has driven down its debt levels considerably it might be expected that CEVA may finally surface into profit, debt-free after all those years of struggle.
A lot is happening at CMA CGM, with the company evolving its strategy at speed. The present performance is good but what it means for the future is unclear.
Source: Transport Intelligence, March 16, 2021