The sharp drop in bunker prices provided a major boost to container shipping group CMA CGM in the first quarter, helping to drive a fourfold increase in net profits to $406 million, despite the volatility on Asia-Europe lanes since Chinese New Year.
Volumes rose 10.5% in the period to 3.1 million TEU, chiefly from the increase in volumes on the East-West lines, particularly to and from the US, where volumes enjoyed sustained growth, and also from the launch of the Ocean Three Alliance.
The group continued to actively optimise its services, opening five new routes in the US and extending its agency network up to 655 agencies in over 160 countries.
Consolidated revenue for CMA CGM was up 1.8% to $4.013 billion, but the group said it “reaped the rewards of its operating efficiency and cost discipline as well as the sharp drop in bunker prices”. Bunker costs per TEU were down, year on year, by 36.5%, helping to more than double the group’s core EBIT margin to $406 million, representing 10.1% of revenue, “once again significantly above peers’ average”, the company boasted. Consolidated net profit was up sharply on first-quarter 2014, at $406 million, a fourfold increase compared with the $97 million achieved in the first quarter of 2014.
CMA CGM said it had continued to roll out its “balanced financial strategy” over the first quarter, “aimed at strengthening its financial flexibility while pursuing controlled expansion to deliver further growth”. Adjusted net debt fell by 10.3%, chiefly due to the favourable impact of the $/€ exchange rate and to the increase in the Group’s cash available. Consolidated adjusted net debt now represents less than half consolidated adjusted equity.
It said this “balanced financial strategy” was recently recognized by ratings agency Moody’s, which raised the group’s credit rating to B1, with a stable outlook.
Highlights in the quarter included taking delivery of the CMA CGM Kerguelen on On 31 March 2015, the group’s first 17,722 TEU vessel designed to be used on Asia-Europe lines. Another five similar-sized vessels will also be delivered this year, along with 6 vessels with a capacity of 9,400 TEU and three vessels with a capacity of 2,100 TEU.
In terms of outlook, the CMA CGM fleet will be further strengthened in 2016/2017 following confirmation of its acquisition of three 20,600-TEU vessels to be delivered in 2017. The company noted that spot freight rates for Asia-Europe lines “have been rather volatile since the Chinese New Year”, while volumes remain “sluggish”. But it said lines to and from the US “continue to perform well.
“In view of the diverse nature of its lines and customer portfolio, the impact of these factors on CMA CGM in the immediate term should be limited,” the company said.
Highlights expected to benefit the group in the future include the Group obtaining the 30-year concession for the container terminal in Kingston (Jamaica), it added.
Meanwhile, CMA CGM LOG, the group’s logistics subsidiary, “continues its expansion”. On 30 April, the subsidiary announced that it had acquired LCL Logistix, a logistics leader in India, “enabling it to accelerate its development in this fast-growing market”. And on 11 May, CMA CGM LOG signed an agreement under which it will manage a logistics platform in Cuba.