CMA CGM reports profit drop of USD 5 BN

CMA CGM: Sharp Decline in Q3 Net Profit

CMA CGM profit falls by USD 5 billion French line CMA CGM reported a group net income of USD 2.01 billion for the first quarter of 2023, a drop of more than USD 5 billion from the previous year due to that cargo demand continued to slow, Alphaliner reports.

CMA CGM posted a 40% year-on-year drop in revenue from shipping activities to US$8.87bn, while shipping EBITDA fell 64% to US$3.05bn. EBITDA declines were larger than those of the big European airlines Maersk and Hapag-Lloyd. However, the line performed better than COSCO, with whom it shares a similar business profile. Both groups operate at 22% of their capacity in the Trans-Pacific, and around 22/23% in the Far East-Europe, with a small tonnage in the Atlantic (3%). Maersk and Hapag-Lloyd have less exposure to the Trans-Pacific, Alphaliner reports.

It also mentions that CMA CGM transported 5.02 Mteu in the quarter, 5% less than a year ago, but average rates per teu were estimated at around USD 1,770 per teu, a drop close to 40% compared to the previous year. .

Logistics and air cargo gains remain modest. CMA CGM described the financial result as strong given the context of global slowdown, inflation, and destocking, saying the results were the fruit of more than USD 30 billion in investments in the last two years. Despite this, shipping still provided 89 % of EBITDA in the quarter, while logistics activities, including the acquisitions of Ingram, Gefco and Colis Privé , which consolidated in Q2 2022, contributed EBITDA of only USD 343M, compared to USD 250M the previous year, says Alphaliner.

EBITDA from other activities (port terminals, CMA CGM Air Cargo, media, etc.) fell 47% year-over-year to USD 45M, mainly reflecting lower storage revenues due to decreased congestion port. The group is no longer reporting earnings before interest and taxes (EBIT) for its activities after the redemption of its bonds this year. In announcing the results, CMA CGM struck a relatively pessimistic note, noting challenging conditions such as increased capacity in the ocean and air transport markets and uncertain demand prospects.

However, he did see relatively resilient consumer behavior in the US and some strength in emerging markets in Latin America and Southeast Asia. After investing 90% of 2022 net profits, CMA CGM remains well funded: financial resources net of debt reached USD 6.2bn at the end of March, an increase of USD 1.5bn from the end of 2022, Alphaliner concludes.

Source: Alphaliner


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