COST CUTS BOOST CMA CGMÆS PROFIT
Cost cuts and improved vessel utilization at CMA CGM resulted in a 67-percent boost in net profit to 47 million euro ($50 million), from 28 million euro in 2001.
“For CMA CGM, 2002 was marked by a rebound,” the company said.
Alain Wils, chief executive vice president, noted the company’s results between 2000 and 2002 showed a “U curve,” marked by a recovery from the lower profits earned in 2001. Operating profit fell from 116 million euro in 2000 to 41 million euro in 2001, and rose again to 105 million ($109 million) last year.
Wils said a move to larger containerships and replacement of chartered vessels by owned ones resulted in lower fleet costs last year. Terminal costs were also reduced and the company further increased its efficiency, he said.
CMA CGM reported its vessel utilization rose last year, as growth in cargo volumes outpaced its 15-percent year-on-year increase in total slot capacity.
The carrier’s traffic surged 34 percent last year to 2.5 million TEUs.
However, because of the depreciation of the U.S. dollar and lower freight rates, the company’s revenue rose only 12 percent in local currency in 2002 to 2.5 billion euro ($2.6 billion).
“In 2002, we have seen freight rates so ridiculous that they barely paid for variable costs,” said Farid Salem, group chief executive of CMA CGM.
Jacques Saade, chairman of CMA CGM, said 2002 “has not really been favorable for shipping lines.” He referred to heavy losses suffered by certain carriers last year.
By contrast, Saade said 2003 has had “an excellent start” for carriers, with rates strengthening and a tightening of capacity. Capacity “will be insufficient during 2003,” he predicted.
CMA CGM has 16 new ships on order for the three-year period 2003-2005.
In an unusual move, the company said it is planning to issue a high-yield bond for 150 million euro ($156 million) to financial institutions. The proceeds will finance part of its planned 800-million-euro ($830 million) investment plans through 2005, and pay back some onerous bank debts. Privately owned CMA CGM said it is no longer considering an initial public offering on the stock exchange.
Several of CMA CGM’s banks told the carrier it has reached their maximum lending amounts, and suggested a bond private placement as an alternative financing.
CMA CGM expects further improvement in its financial results this year. The French carrier expects to benefit from a “considerable saving” in tax following the introduction of a tonnage tax in France.