French carrier says CEVA acquisition will create $30 billion company offering door-to-door logistics.
CMA CGM Group said it had revenue of $23.5 billion in 2018, 11.2 percent more than the $21.1 billion it had in 2017. The Marseilles, France-headquartered container shipping giant had a net profit of $34 million in 2018 compared to $697 million in 2017, excluding exceptional items on non-consolidated subsidiaries including the Swiss logistics company CEVA and the containership leasing company Global Ship Lease.
CMA CGM had core earnings before interest and tax (EBIT) of $610 million in 2018, less than half the $1.58 billion core EBIT it reported in 2017. The company moved 20.7 million TEUs of containers in 2018, 9.3 percent more than in 2017.
Revenue was up even more sharply in the fourth quarter of 2018 to $6.3 billion, 14.9 percent more than the $5.48 billion CMA CGM reported in the fourth quarter of 2017. CMA CGM had core earnings before interest and tax (EBIT) of $195 million in the fourth quarter of 2018, compared to $282 million in the fourth quarter of 2017. The company moved 5.32 million TEUs in the fourth quarter of 2018, 7.9 percent more than in the same 2017 period.
CMA CGM launched a tender offer for CEVA stock last month. Through the CEVA stock it owns and derivative contacts, CMA CGM said it already had “economic exposure” to more than half of CMA CGM’s equity. It said together with CEVA the two companies have created a new strategic plan that will “make the CMA CGM Group a world leader in both transport and logistics, with 100,000 employees and more than $30 billion in revenue.”
Under the plan, CMA CGM will be able to provide CEVA solutions for its customers and vice versa.
“The Group will henceforth be able to offer a complete range of logistics services covering the entire logistics chain, from production logistics to last-mile delivery, and including air, sea and land transport services as well as warehousing services,” said CMA CGM.
It said integration of CMA CGM’s freight forwarding activity into CEVA will increase CEVA’s footprint in ocean freight forwarding and allow economies of scale and cost reductions through pooled operations and cost synergies.
“In 2018, in a difficult environment, the group posted a sharp rise in volumes and a record revenue,” said Rodolphe Saadé, chairman and chief executive officer of CMA CGM. “Despite an increase in oil prices, our recurring EBIT margin remains considerably above the industry average.” CMA CGM said its core EBIT margin (EBIT divided by revenue) was 2.7 percent in 2018 compared with 7.5 percent in 2017.
He said, “In 2019, despite persisting geopolitical tensions, trade perspectives are positive” and said the company was “pursuing our strategy of innovation and digital transformation in order to continue to offer excellent service to our customers and strengthen our performance.”
Saade said CMA CGM “will continue our development with the objective of improving profitability. That is why we are launching a new $1.2 billion cost reduction plan.” The company said the plan includes both optimizing lines and brands as well as a streamlining processes. The company already has agreed to unite its Containerships and McAndrews brands next month under the Containerships name. Another CMA CGM brand is APL.
He said CMA CGM’s current public tender offer for the logistics company CEVA is friendly and part of CMA CGM’s “ambition is to become a world leader in both transport and logistics, thereby providing a complete and efficient service offer to our customers.”
