- Strong uptrend fo CMA CGM in second quarter
- Officials say strategic partnership is the key
- Plans acquisition of the Finnish business Containerships, to offer CMA CGM services in the intra-regional trades
- Second event after the acquisition of Mercosul in South America
- Reflecting a core EBIT margin of 1.2%, despite the unit bunker costs up by 27.7% per ton of bunker over the past year
The Board of Directors of the French CMA CGM Group, a worldwide container shipping company, met under the chairmanship of Rodolphe Saadé, Chairman and CEO, to review the financial statements for the second quarter of 2018.
What was found?
In the second quarter of 2018, the volumes transported by CMA CGM increased by +9.6%, higher than the industry growth.
This progress can be explained by the strength of the Transpacific and Asia/Gulf lines within OCEAN Alliance, as well as lines from and to South America.
Average revenue per container transported decreased slightly (-2.1%) in the second quarter of 2018 in comparison with the second quarter of 2017.
But the Group intends to pursue the cost reduction initiatives announced upon the release of its first quarter results to improve its operational and financial performance.
These notably concern the optimisation of container fleet management and the improvement of energy efficiency.
EBIT recovers
The revenue of the Group in the second quarter of 2018 increased by +7.4% as compared to last year, attaining USD 5.70 billion.
Over the course of the second quarter of 2018, CMA CGM recorded a Core EBIT of USD 67.1 million, reflecting a core EBIT margin of 1.2%.
The Core EBIT margin notably echoes the very sharp rise in unit bunker costs (+27.7% per ton of bunker over the past year).
The consolidated net income Group share amounts to USD 22.7 million in the second quarter. It is supported by improved financial results, positively impacted by the rise of the US dollar versus the Euro.
What did they do to recover?
During the second quarter, the Group continued its development along the lines of the strategy defined by Rodolphe Saadé.
1. Maritime development
Announcement of the acquisition of Containerships, an intra-regional transport leader in Northern Europe
The acquisition of the Finnish business Containerships, a specialist in the intra-European market, is part of the strategy to strengthen CMA CGM’s offering in the intra-regional trades, one year after the acquisition of Mercosul in South America. Containerships offers its customers a complete range of services, with logistics solutions by ship, truck, rail and barges. Containerships will take delivery of four LNG-fuelled vessels with a 1,120 TEU capacity later this year. This transaction, subject to approval by the relevant authorities, should be closed before the end of the year.
2. New vessel induction
The Group expanded its fleet in the second quarter with the delivery of the CMA CGM Jean Mermoz, a 20,600 TEU capacity container ship designed to operate on the Asia-Europe trades. It also took delivery of another Ice-Class vessel, whose reinforced hulls will enable it to operate on the Baltic routes.
Extended Ocean Alliance service
During the second quarter, the Group continued to develop its services, in particular with the launch of Ocean Alliance Day 2 Product. With 41 East-West services (Asia-North America, Asia-North Europe and Asia-Mediterranean), the operational alliance of which CMA CGM is a part represents the largest offering on the market. Ocean Alliance is number one on the Trans-pacific trade, with 20 dedicated services.
Logistics development: Strengthened presence in logistics
On May 3, 2018, CMA CGM acquired a stake of approx. 25% in CEVA Logistics in the company’s initial public offering. With this operation, the Group strengthens its presence in logistics. Commercial cooperation projects between the two groups will allow CMA CGM to offer its customers high added value solutions throughout the logistics chain.
CMA CGM’s securities were converted into CEVA Logistics common shares on August 13, 2018.
Customer Centricity: Commercialisation of a new “connected container” offering
On 19 June, the Group announced the deployment of an innovative container tracking solution: TRAXENS by CMA CGM, a connected box that tracks, amongst others, the location, the opening and closing of container doors, and the temperature variations.
This new offering is an important element in the Group’s Customer Centricity strategy, enabling the collection and analysis of extensive data to improve customer service.
Innovation: Cooperation with Shone, a start-up specialising in artificial intelligence
By enabling Shone (based in San Francisco) to collect data on board the Group’s vessels, CMA CGM is participating in the development of an artificial intelligence system designed to facilitate the work of crews on container ships, whether in decision support, piloting assistance or maritime safety.
These strategic moves under the daring CEO of CMA CGM, helped recover and perfoem despite the odds imposed by the fuel costs over the past year. Also, CMA CGM Group is confident in the second half of the year and anticipates an improvement in its core EBIT margin.
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Source: CMA CGM
