The credit profile of CMA CGM S.A. (CMA) is more robust than that of competitor Hapag-Lloyd AG (HL) on account of its higher profitability, bigger market share and more diverse geographic presence, says Moody's Investors Service.
The agency points out that the credit profile of the French container shipping company CMA (B2 positive) is more robust than that of German peer HL (B2 negative) on account of its superior profitability, bigger market share, and more diverse geographic presence.
In the report entitled ‘Shipping: CMA CGM and Hapag-Lloyd: Peer comparison’, Moody's says that the French liner may have an advantage when tapping the capital markets for future fleet investments, assessments.
However, HL's financial and liquidity profile has been more stable than CMA's, while Moody's expects both companies' credit metrics to reduce some of their gap.
"CMA's advantage over HL is particularly evident in its ability to maintain higher profitability levels," said Marie Fischer-Sabatie, author of the report. "During the 2007-14 period, CMA's EBIT margin (including Moody's adjustments) was double that of HL, averaging around 8% compared to HL's 4%."
In its report, Moody's also noted that while both companies have materially reduced their costs, HL's average operating costs per 20-foot equivalent unit (TEU) have remained higher on average than CMA's.
Moody's notes that CMA has an advantage over HL in terms of size, market share and geographic diversity. While the combination of Chile's Compania Sud Americana de Vapores S.A. (CSAV, unrated) container shipping activities with those of HL, in a deal that closed in December 2014, will increase HL's scale, CMA will remain larger in scale by some distance.