Swiss transport and logistics firm Ceva Logistics today reported a small revenue gain in the fourth quarter and a mid single-digit increase for 2018 in a year its CEO called one of “structural change” with a focus on paring its sizable debt load.
At the same time, Ceva reaffirmed that it will not object to shareholders who want to tender their holdings to French steamship line CMA CGM at the liner’s buy-out offer of CHF$30 (approximately US$29.97) per share. Ceva’s board has already rejected the offer, saying it undervalues the company by about one-third. The CMA CGM tender offer was launched February 12 and is set to run until March 14.
CMA CGM already owns one-third of Ceva’s shares. At the time of the share acquisition last year, CMA CGM said it would enter into a strategic partnership with Ceva in an effort to offer customers more value than just the traditional ocean line-haul services. Last November, CEVA acquired CMA CGM’s freight management business for US$105 million (all further monetary amounts in U.S. dollars).
For the quarter, Ceva reported revenue of $1.9 billion, up 0.7 percent from year-earlier levels. In constant currency, revenue rose 6.6 percent year-over-year. EBITDA fell to $50 million from $57 million, a 12.3 percent decline. In constant currency, EBITDA declined 5.7 percent quarter-over-quarter.
For the year, revenue rose 5.2 percent to $7.35 billion (up 5.4 percent in constant dollars). EBITDA declined 13.9 percent to $198 million (a 10.4 percent decline in constant dollars). Full-year EBITDA was impacted by unfavorable currency adjustments, and “one-time events” such as the bankruptcy of a local contract logistics partner in Italy and accounting changes that reflected a more conservative outlook for the company’s business, Ceva said
Ceva said it reduced its 2018 net debt load to $1.19 billion from $2.08 billion at year-end 2017. The company said the reduction underscored the company’s commitment to “deleverage” its balance sheet throughout the year.
In a statement today, CEO Xavier Urban said he was confident the company would hit its “medium-term targets of more than $9 billion in annual revenue and adjusted EBITDA of $470 million to $490 million by 2021.”
Ceva’s business is almost evenly split between freight management and contract logistics. Contract logistics revenue in 2018 rose 3.3 percent to $3.84 billion, the company said. The positive impact of new business in North America and Europe was offset by two onerous contracts in Italy and the local partner’s bankruptcy, it said. Combined, those events resulted in $42 million in “unplanned” costs, Ceva said. The adoption of a more conservative accounting methodology cost the unit another $10 million, Ceva said.
Freight management revenue rose 7.3 percent to $3.5 billion, paced by a 7.9 percent increase in ocean tonnage. Ocean yields – measured as net revenue per twenty-foot equivalent unit (TEU) – fell slightly as the company sacrificed some yield for market share expansion. Air volumes dropped 0.7 percent year-over-year due to some customer defections as well as a greater focus on yield at the expense of volume. Air yields rose 6.7 percent year over year, Ceva said.
