CMA CGM profit drops, warns of ‘sharp’ rate decline
French carrier CMA CGM reported a lower group net profit of USD 7.6 bn for the third quarter after average earnings per teu fell nearly 3% versus the previous three months.
Shipping operations, which contributed nearly all the group’s profit, showed a quarter-on-quarter revenue decline of 1.9% to USD 15.7 bn. Meanwhile, operating earnings (EBIT) fell 6.7% to USD 7.5 bn.
The company’s operating margin fell below 50% for the first time since Q3 2021. In addition to lower rates, higher costs also ate into the line’s profits: operating expenses rose 8.1% quarter-on-quarter, with bunkers and consumables 8.3% higher and ocean and inland third-party transportation costs rising 19%.
The carrier has so far maintained liftings, however, which reached 5.67 Mteu in the third quarter, an increase of 50,000 teu on the previous three months, while 9-month volumes were practically identical to 2021, at 16.59 Mteu.
Significant reduction in freight rates
Announcing the results, CMA CGM said the outlook was for both ‘normalizing’ trade flows, and a ’sharp’ decline in freight rates, indicating the latter had come faster than expected.
The French carrier continues to emphasize its strategy of strengthening port, logistics and air capabilities — see box left — though it will take some time for earnings to filter through to the bottom line.
Operating earnings have started to tick up at the company’s logistics division, but at USD 410 M the division contributed just 1.7% of the latest quarter’s EBIT.
At the group level, net debt (debt minus cash) improved significantly in the period, to USD 78 M as of 30 September, versus USD 5.3 bn three months earlier.