News / CMA CGM stays positive, despite 'unsatisfactory' third-quarter results

21/11/2016

CMA CGM reported a $268m net loss in the third quarter, despite efforts to focus on higher-paying cargo, bringing the carrier’s cumulative trading deficit for the nine-month period to $496m.

Excluding the acquired NOL business, the world’s third-largest carrier made a loss of $202m in the third-quarter, compared with a profit of $51m in the same period of 2015.

On a like-for-like basis, also excluding NOL, CMA CGM’s revenue plunged by 16.3% to $3.33bn. The average freight rate per teu also fell.

The carrier said: “In a market environment shaped by continued pressure on rates, the average rate per teu, excluding NOL, was down 13.9% from the third quarter 2015, but up 3.8% on the second quarter.”

It said that this had ended “the downward trend” on average freight rates that had lasted for more than a year.

The number of containers carried on its vessels dipped by 2.7% to 3.2m teu, which CMA CGM attributed to “the group’s strategy of focusing on high-contribution freight”.

By comparison Maersk Line reported volume growth of 11% quarter-on-quarter which it suggested was partly due to a ‘flight to safety’ by shippers following the collapse of Hanjin Shipping. The Danish carrier reported a loss of $116m in the third quarter.

CMA CGM admitted that its operating performance was “unsatisfactory”, but claimed the company remained “among the most resilient in the industry”.

During the quarter, CMA CGM raised $580m in a sale and leaseback transaction of containers; $880m from the sale and charter back of 11 ships, and a further $260m in a receivables securitisation programme of its sea freight invoices. This enabled the carrier to discharge early the bank loan facilities used for the $2.4bn acquisition of NOL, which had included a ‘goodwill’ amount of $1.3bn.

CMA CGM also faced significant headwinds on its West African trades while its European shortsea brands MacAndrews and OPDR grappled with an industry-wide rates downturn.

In April credit rating agency Standard & Poor’s downgraded CMA CGM from B+ to B with a negative outlook.

CMA CGM said that the process of integrating NOL into the CMA CGM group “continued during the quarter and delivered its first commercial and operational result”.

The full reorganisation of NOL’s container arm, APL, and CMA CGM would be “completed with the deployment of the Ocean Alliance next April”.

CMA CGM together with Cosco, Evergreen and OOCL announced their pro-forma network details on 3 November. Ocean will be the largest of the three alliances, deploying 331 vessels with an aggregate capacity of 3.3m teu.

Currently Evergreen is a member of the CKYE alliance, which previously included the bankrupt Hanjin, while OOCL is a member of the G6 alliance.