CMA CGM Returns to Profit

Thursday, May 06, 2010

The Board of Directors of France-based CMA CGM, the world’s third largest container shipping group, recently met under the chairmanship of M. Jacques R. Saadé to review the financial statements for the year ended 31 December 2009.
 
In a container shipping environment where every player was severely affected by the global crisis – the deepest the maritime shipping industry has ever experienced – the Group’s consolidated revenue declined by 30% to $10.5b in 2009, dragged down by a sharp reduction in freight rates and volumes. Overall, 7.9 million TEU* were carried by the Group during the year, a 9% decline that nevertheless outperformed the 12% drop in world container traffic.

In response, the Group implemented a drastic cost reduction plan that delivered nearly $800m in savings, without sacrificing its potential for future development.
 
2009 was a year of contrast, when the upturn in volumes on most of the trades beginning in July and the Group’s focus on freight rates restoration and cost reduction resulted in a return to positive EBITDA in the fourth quarter after eight months of deep losses.
 
As a result, EBITDA limited its decline to a loss of $667m over the year and the net loss from maritime shipping operations stood at $889m. The consolidated net loss for the period however came to $1.4b, however due to the $548m in non-recurring expenses, which should give the Group a very healthy start for 2010.
 
Outlook for 2010
Markets that were hit first by recession, such as trades to United States or Asia-Europe and intra-Asia trades, have experienced sustained year-on-year growth in the first two months of 2010, with Asia-Europe volumes even rebounding by a spectacular 30% or so.
 
For CMA CGM, a total of 2.1 million TEU were transported in the first quarter, up 22% and 4% compared with first quarter 2008. EBITDA is estimated at $380m, up $640m on first quarter 2009 and in line with first quarter 2008, while revenue was around $3.2b, up 30% year-on-year.
 
In 2010, CMA CGM will leverage a comprehensive range of measures to drive further growth:
 
Ø        Major operational measures to streamline services, develop new partnerships, launch new lines in promising markets, etc., in a continuously reaffirmed commitment to being the preferred, benchmark partner for its international customers.
 
Ø        Cost rationalisation, with the arrival of modern, efficient new vessels offering major economies of scale, the return of chartered vessels or renegotiation of expiring charters in a still favourable market and the reduction in ship cruising speeds.
 
Ø        Enhanced customer services, by expanding the agency network, increasing the reefer fleet, deploying e-commerce solutions more widely, etc., to respond as effectively as possible to their emerging expectations.
 
2010 will also be shaped by the delivery of the Group’s new Head Office, the CMA CGM Tower, which in the autumn will consolidate nearly 2,000 Marseille staff members currently based at seven locations.
 
According to Rodolphe Saadé, Executive Officer of the CMA CGM Group: “The first 2010 quarter results, which largely exceeded expectations, demonstrate the Group’s ability to rebound. Since late 2009, CMA CGM has been restructuring its balance sheet and opening its capital to new investors. We have received several offers from industrial and financial investors and are committed to finalising negotiations before the end of summer”.
 

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