2Q Red Ink for CMA CGM Again
CMA CGM, the world's fourth-largest container shipping firm, reported a second straight quarterly loss as its takeover of CEVA Logistics weighed on its results, but said its business volumes remained strong thanks to growth in the U.S. economy.
The French-based group said on Friday that it expected a better second half of the year, supported by previously announced plans to reduce costs and reorganise its shipping services.
CMA CGM said it made a second-quarter net loss of $109 million, adding to a $43 million loss in the first quarter.
The group's shipped volumes increased by 6.3% year-on-year, accelerating from 4.4% growth in the first quarter, driven by brisk U.S. demand and healthy activity on its intra-regional lines.
The company reiterated that a U.S.-China trade dispute was curbing its activity, with Southeast Asia partly replacing China in meeting high U.S. import demand.
"The environment is complicated but so far we have not seen an effect on our shipped volumes from the trade war or general uncertainty," Chief Financial Officer Michel Sirat said.
"At the moment, the trade war is not weighing on consumption in the United States," he told Reuters by telephone.
Volume growth together with the integration of CEVA Logistics supported a 35% jump in CMA CGM's second-quarter sales to $7.7 billion.
But the acquisition of loss-making CEVA, which CMA CGM wants to break even by the end of this year, contributed to the group's net loss.
The loss also reflected a negative $71 million impact from an accounting change on lease contracts that should progressively diminish in coming quarters, Sirat said.
The shipping group made significant progress in a $1.5 billion savings programme during the second quarter, with a reduction of about $50 in average container costs that could represent around $1 billion in annual savings, Sirat added.
The group was also preparing to adopt stricter rules on vessel emissions that take effect in January.
Nearly all of its fleet would initially comply by using low-sulphur fuel, with so-called scrubber filters and new gas-powered ships also to be gradually adopted, Sirat said.
(Reporting by Gus Trompiz