“CMA CGM Q4 Earnings Plunge 82.5% Due To Red Sea Disruptions And Weak Consumer Demand In 2023

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  • CMA CGM, a leading global container shipping group, reported an 82.5% decline in core earnings for the fourth quarter of the previous year.
  • This comes as the company faced challenges throughout the year, including disruptions in trade routes, particularly in the Red Sea, and weakened consumer demand.
  • In 2022, CMA CGM emerged as France’s most profitable company, boasting an annual net profit of $24.88 billion. However, in 2023, its net profit plunged to $3.64 billion.

Challenging Year

The outlook for 2024 remains uncertain, contingent on various factors such as macroeconomic conditions and geopolitical tensions. The company anticipates a potential rebound in world merchandise trade from 2023 lows, but concerns linger about tensions in the Red Sea affecting freight rates. Additionally, the industry faces pressure from the increased capacity in the global container ship fleet.

Red Sea Disruptions

CMA CGM, like other shipping groups, has been impacted by disruptions in the Red Sea since October due to attacks by Yemen’s Houthi militia on commercial vessels. These attacks, a response to Israel’s conflict with Palestinian Hamas militants, have slowed trade between Asia and Europe.

Financial Performance

The shipping sector experienced a decline in 2023 due to inflation dampening consumer goods demand and a shift in consumer spending to services. CMA CGM reported a nearly 73% drop in full-year earnings before interest, taxes, depreciation, and amortization (EBITDA) to $9.0 billion on revenue of $47.0 billion, down 36.9% year-on-year. The shipping division, contributing two-thirds of the group’s revenue, witnessed stable volumes but saw a 76.6% drop in full-year earnings.

Logistics Resilience

Contrastingly, the Logistics unit demonstrated resilience, with a 25.5% increase in EBITDA in Q4 2023 and a full-year growth of 12.5%. Rodolphe Saade, Chairman and CEO, highlighted the resilience of the Logistics unit, which accounts for a significant part of the business.

Strategic Changes

CMA CGM is undergoing strategic changes, with the EU Commission recently approving its acquisition of Bollore’s logistics operations. This approval is subject to specific conditions and divestments, reflecting adjustments in the company’s operations.

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Source: Finance Yahoo