French shipping group CMA CGM registered a consolidated net income of US$86 million in the first quarter of 2017, a reversal from the $100 million loss it posted in the same period a year ago.
“This result demonstrates the Group’s operational efficiency and expertise, and positions CMA CGM in the first place for operational performance among the leading industry players,” said the company in a statement.
Its rivals Danish leader Maersk Line and German carrier Hapag-Lloyd earlier reported first-quarter losses, but both expressed optimism, noting that growing demand is expected to boost earnings for the rest of the year.
The CMA CGM group, the world’s third biggest container line, also announced a strong increase in consolidated revenues of 35.9% to $4.6 billion in comparison with the first quarter of 2016.
In addition, its average revenue per container carried went up, leading to overall revenue to rise faster than volumes. During the period covered, volumes carried surged 34.2% against the first three months of 2016, thanks to the integration of APL.
CMA CGM reported a core EBIT margin of 5.5% to $252 million, a significant increase from the $3 million made in Q1 2016, as well as an increase of 1.3 points in comparison to the fourth quarter of 2016.
And for the first time since 2011, APL, the Singapore liner that the group acquired just last year, pulled off a return to profitability, achieving a gross operating income of $56 million, or a 4.4% core EBIT margin. This, said CMA CGM, is thanks to the combined benefit of higher revenue per unit and cost control. APL’s net result was also a profit of $26 million.
Despite the strong increase in fuel price, combined costs continued to drop, owing to the group’s operational improvement plan called Agility and synergies following the integration of APL.
With this positive turn of events, and excluding the potential variations in fuel price and exchange rates, CMA CGM is upbeat about the outlook for the year, saying it “targets a further improvement in the Group’s core EBIT margin, thanks to the continued improvement in freight rates supported volumes.”
Rodolphe Saadé, CEO of CMA CGM group, stated: “In the current shipping context, which is still affected by insufficient freight rates, CMA CGM has continued its positive trend [began] end 2016, with further improvement in operating margins and net income.”
He continued that amidst strong headwinds in the shipping industry, the liner should still see an improvement in operational results over the next quarter, as it leverages the new OCEAN Alliance and maintains its focus on operational efficiency and innovation.
Photo: Eric Garcetti
