French carrier reports revenue up 17 percent, a positive EBIT, but net loss in the first quarter.
CMA CGM reported a net loss of $77 million in the first quarter of 2018 compared with a profit of $86 million in the same 2017 period.
Revenue was $5.41 billion in the first quarter, up 17.1 percent from the $4.62 billion recorded in the first quarter of 2017. The French container carrier moved 4.95 million TEUs in the first quarter, 15 percent more than it did in the first quarter of last year.
“The shipping industry is experiencing sustained growth but was hit in the first quarter by the sharp increase in bunker prices,” said Rodolphe Saadé, chairman and chief executive office of CMA CGM.
Fuel oil prices, the company said, were up 19.4 percent.
As a result, CMA CGM is one of several carriers that announced an emergency bunker recover measure last week to offset the rising price of bunker fuel. On Friday, the website Ship and Bunker reported the global average for the common bunker fuel IFO 380 at four leading bunkering locations around the world was $447.50. A year earlier it was $303.
“In this environment, CMA CGM succeeded in recording a strong increase both in volumes transported and in revenue, while maintaining a positive core EBIT margin, thus demonstrating once again the relevance of our strategy,” said Saade, who predicted “volumes should remain high throughout the year.”
The company said the container shipping market “should see strong volume growth in 2018. The delivery of new vessels will significantly decrease in the second half of the year. In this context, CMA CGM expects an improvement in the market environment in the second half of 2018, excluding bunker costs and the impact of exchange rates. The measures announced by the CMA CGM Group regarding the increase in
freight rates, the implementation of Emergency Bunker Recovery Measures
and cost reduction initiatives should bear fruit in the second half of
2018.”
Saade said, “In order to deal with the increase in bunker prices, which continue to rise into the second quarter, we are implementing an exceptional surcharge.”
The CMA CGM emergency bunker surcharge, which amounts to $55 per TEU on “dry” containers and $85 per TEU on refrigerated containers, goes into effect Friday for most of the world but on July 1 for shipping services calling the United States and Taiwan. The U.S. Federal Maritime Commission requires the ocean freight price increases must be reported to it 30 days before they go into effect.
Saade said CMA CGM “will continue its development strategy for its customers both in maritime transportation and in building end-to-end solutions, while pursuing its digital transformation and strengthening the expertise of its teams.”
The carrier attributed its growth to the success of the OCEAN ALLIANCE, its vessel-sharing agreement with COSCO, OOCL and Evergreen, as well as “strong momentum” in services to Africa, North America and South America. In 2017, CMA CGM acquired Mercosul, a leading domestic container carrier in Brazil, from Maersk.
More recently, on May 3, CMA CGM acquired nearly a 25 percent stake in CEVA Logistics with the aim to develop end-to-end solutions.
In January, CMA CGM launched Ze Box, an international startup incubator in Marseille that it says is part of its strategy to make digitalization one of the pillars of CMA CGM’s development.
CMA CGM grew the size of its fleet from 440 ships with 2.16 million TEU capacity in the first quarter last year to 494 ships with 2.53 million TEU capacity in the first quarter of 2018.
On January 26 it took delivery of its largest ship ever, the CMA CGM Antoine de Saint Exupery, named after the famous author and aviator. With a capacity of 20,600 TEUs, she is the largest vessel in the world flying the French flag.
The company also has rolled out new products such as Reeflex for transporting liquids in flextanks in temperature-controlled containers and Cargo Value Serenity, which guarantees compensation to shippers if there is a loss or damage to cargo, even from an “act of God” such as a storm.
CMA CGM sales strong but fuel prices rising faster
