CMA CGM: 1H Success Despite a Fluctuating, Difficult Environment

Monday, August 29, 2011

CMA CGM, the world’s third largest container shipping company, reported revenue of $7.3b for the first six months of 2011, an increase of 8% compared with the year-earlier period. Business benefited from an increase in volumes carried and stable freight rates on most of the group’s lines. In all, more than 4.8 million TEU were carried over the period, a 9.1% increase that outperformed the market, notably thanks to the Group’s modern, competitive and particularly efficient fleet. These figures reflected the firm demand observed over the period in most of the markets where CMA CGM holds strong positions, with improved freight rates on the South American and Caribbean lines (up 5%), the Transatlantic lines (up 6%) and the Transpacific lines (up 11%) amply offsetting the Asia Europe and Mediterranean trades.  The Group continued to deploy the cost-control initiatives undertaken in 2009 and 2010. Despite high oil prices, which pushed up fuel costs by 36% over the period, the consolidated net profit stood at $237 million (including the impact of asset disposals), lower than in first-half 2010, which saw record profitability across the container shipping industry. The Return on Invested Capital (ROIC) stood at 11.3%
During the first half of 2011, CMA CGM Group substantially strengthened its balance sheet. It sold an equity stake in the Company by issuing $500 million in ORA equity notes to the Yildirim Group and raised an aggregate $945 million through two bond issues denominated in dollars and euros. This completed the plan to bolster the balance sheet, as approved at the beginning of the year. Also over the period, the Group financed most of its 2011 and 2012 capital expenditure plan. As of 30 June 2011, the Group had $1.7 billion in cash, before the early redemption of two bond issues in July, in a total amount of $550 million.

Outlook
CMA CGM Group will continue to develop its strategic positions in emerging markets, with a focus on Russia and India. In addition, it will pursue expansion in Latin America, where it will benefit fully from the 2014 opening of the Panama Canal’s third set of locks. The Group’s new hub, in Kingston, will be ideally located to capitalise on the new opportunities.
Moreover, the Group will pursue its program to reduce costs in the terminal operations, logistics processes and capital projects.
CMA CGM Group believes that 2011 should be a positive year, barring any unforeseen events in today’s highly unstable global economy.
In commenting on these results, Rodolphe Saadé, Executive Officer said: “Our first-half performance was very satisfactory, both operationally and in regard to the strength of our balance sheet. We drove faster growth in freight volumes than the competition, while demonstrating the effectiveness of our strategy by raising nearly a billion dollars from leading international institutional investors. Although the current global economic situation calls for caution, we remain confident in our ability to further strengthen our positions thanks, in particular, to our modern, efficient fleet and the quality of our extremely professional teams, which enable us to take a calm view of both the medium and the long term.”

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