CMA CGM: Sharp Decline in Q3 Net Profit

CMA CGM: Sharp Decline in Q3 Net Profit

According to sources, in the third quarter of this year, CMA CGM, the leading French shipping company, experienced a significant downturn in net profits, reporting a mere USD 388 million. This figure marked a notable decrease from its profits three months earlier and a staggering 95% decline compared to the same period in 2022, highlighting the swift challenges faced by the container markets.

Despite grappling with a 52% year-on-year decline in average rates, which stood at USD 1,322 per TEU (twenty-foot equivalent unit), CMA CGM managed to maintain a competitive edge within the range observed by major carriers. However, the company fell short in volume growth compared to some competitors, recording a marginal 1% increase in liftings at 5.72 million TEU in Q3.

The French group attributed the subdued volume growth to a combination of factors, including more moderate household consumption in an inflationary environment, particularly evident in East-West routes. Nevertheless, the company experienced continued growth in volumes on North-South and short-sea routes.

CEO Rodolphe Saadé acknowledged the challenges but described the overall performance as “solid.” He emphasized the company’s commitment to its growth strategy in terminals and logistics, noting that, despite a drop in freight rates, shipping activities remained the primary contributor to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Out of a total group EBITDA of USD 2.0 billion, shipping activities generated USD 1.6 billion.

Logistics activities contributed USD 348 million in EBITDA, marking a 3% decline from the previous year, primarily due to a drop in freight management earnings. Other activities, encompassing port terminals and air cargo, generated USD 56 million in EBITDA, reflecting a substantial 58% decline year-on-year. This decline was attributed to reduced volumes at port terminals and diminished storage revenue, with the air freight market affected by higher capacity and weak demand.

Despite the challenges, CMA CGM remains optimistic about its future earnings, with the anticipation of the first full-year contribution in 2024 from the acquisition of the GCT Bayonne and New York container terminals, renamed Port Liberty Bayonne and Port Liberty New York in August 2023.

In light of the anticipated continued impact of the global economic slowdown on the industry, CEO Rodolphe Saadé reiterated the company’s commitment to cost control and emphasized ongoing efforts in decarbonizing and digitalizing the supply chain to meet customer needs effectively.

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