News / CMA CGM liftings up in 2019, but new rules and Ceva loss wipe out profits

CMA CGM has posted a net loss of $229m for 2019 – this compares with a profit of $34m the year before.

The French transport group’s result was dragged down by the $329m negative impact of new accounting rules on vessel time charters and a $140m loss by Ceva Logistics.

However, CMA CGM remains bullish about its liner trade outlook and its ability to turn around the loss-making logistics arm, despite the adverse effect of the coronavirus outbreak on Chinese exports.

Turnover at the group soared 29% on the previous year, to $30.3bn, boosted by $7.1bn in revenue from Ceva.

Container liftings on its fleet of 502 vessels increased by an above-industry par of 4.1%, to 21.6m teu, which CMA CGM attributed to growth in its shortsea business, “strong growth” in intra-Asia and “organic growth” in the African and Latin American trades.

“After an extremely robust January, the early part of the year has been marked by the Covid-19 crisis,” it said, and added: “There has been an upturn in volumes, and a major catch-up effect is expected once the health situation stabilises, as western countries will be seeking to rebuild their inventories”.

CMA CGM said it expected to return to “normal capacity as of mid-March” out of China, as it reactivates its network following the crisis.

Chairman and chief executive Rodolphe Saade tweeted: “I observe an upturn of the economic activity in China; 80% of the manufacturing units are again operational. And every day, more open. We are anticipating a rebound in volumes related to restocking.”

Indeed, the Ocean Alliance has reinstated some blanked sailings this month, after an earlier-than-expected recovery in manufacturing and trucking. A carrier source told The Loadstar last week it had been “pleasantly surprised” by the firm booking forecasts for the coming weeks.

“Cargo is coming back onstream much earlier than we had expected in China, so we will be rehashing the number of loaders for the second half of March,” he said.

Nevertheless, CMA CGM and its peers have lost millions in top line revenue due to the Covid-19 restrictions which followed Chinese New Year and, even assuming pent up demand provides a liftings boost in the second quarter, they could find it a challenge to recover from Q1’s financial hit.

Moreover, with the cashflow tap having been turned right down for several weeks, carriers without the benefit of deep pockets could become financially stressed in the coming months as they continue to be responsible for charter hire on their ships, along with their other usual fixed costs.

Meanwhile, CMA CGM is persevering with its goal of turning the Ceva acquisition from a negative asset to a positive for the group.

In its “second-phase turnaround plan” for the logistics business, it said it was “pursuing its strategic transformation plan, aimed at delivering strong revenue growth combined with a significant improvement in its profitability”.