Higher sales netted increased volumes, but the bottom line was hit by higher fuel costs and lower freight rates.
CMA GGM said it had a profit of $22.7 million in the second quarter ending June 30 compared with $213 million in the same period last year.
The sharp drop in profit came even though revenue was $5.7 billion in the second quarter of 2018 compared with $5.31 billion in the second quarter of 2017.
The French carrier carried 5.19 million TEUs in the second quarter, 9.6 percent more than in the same 2017 period. The company’s fleet capacity grew from 2.4 million TEUs to 2.6 million TEUs.
On Thursday in Le Havre, Bruno Le Maire, France’s minister of economy and finance, and Elisabeth Borne, France’s minister in charge of transport, inaugurated the CMA CGM Antoine Saint Exupery, the third in a series of 20,600-TEU containerships the company has put into service.
Rodolphe Saadé, chairman and chief executive officer, said, “The strong volume growth demonstrates our commercial strength and the quality of our service offering.”
The company said the volume growth “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.” CMA CGM’s partners in the Ocean Alliance are COSCO Shipping, OOCL and Evergreen.
Saadé also highlighted CMA CGM’s acquisition of a 25 percent stake in CEVA during the quarter, calling it “an important step in our strategy to complement our transport offering with logistics services.”
CMA CGM acquired Finland’s Containerships, a short-sea operator specializing in intra-regional transportation in Northern Europe in June.
Saadé told Reuters during the inauguration of the CMA CGM Antoine Saint Exupery that the company will continue to look at acquisition opportunities.
The company said average revenue per container transported decreased 2.1 percent in the second quarter of 2018 in comparison with the second quarter of 2017.
CMA CGM said its core earnings before interest and taxes in the second quarter was $67.1 million, down from $472 million in the second quarter of 2017. EBIT margin was 1.2 percent in the second quarter of 2018 compared to 8.9 percent in the second quarter of 2017, and the company said this “echoes the very sharp rise in unit bunker costs, which have risen by 27.7 percent ton of bunker over the past year.”
Lars Jensen, CEO of SeaIntelligence Consulting, said in a blog entry that CMA CGM’s EBIT margin of 1.2 percent for the quarter makes it “tied with Hapag-Lloyd for best performance in Q2, making the French and German carriers the best performing of the global carriers in Q2.”
While CMA CGM had higher volume growth than Hapag-Lloyd, Jensen pointed out that part of that increase also reflected its purchase of Mercosul, a leading carrier in the Brazilian domestic market, from Maersk last December. CMA CGM said when the deal was announced that Mercosul reported revenues of $128 million in 2016 and “offers strong profitability.”
“It is quite likely that the underlying organic
growth for CMA CGM is closer to the underlying market growth, and hence
the French line is closer connected to the carriers which have been
pursuing yield rather than organic growth of market share,” wrote Jensen.
CMA CGM said it is pursuing cost-reduction initiatives by optimizing container fleet management and improving energy efficiency.
The company said it is “confident in the second half of the year and anticipates an improvement in its core EBIT margin, thanks in particular to the recent rise in freight rates and sustained of volumes.”
CMA CGM reports over $190 million profit plummet
