The third largest container carrier saw net profits in 2015 decrease 2.9 percent to $567 million on revenues that fell 6.4 percent to $15.7 billion compared with the previous year, according to the company’s most recent financial statements.
French ocean carrier CMA CGM saw its net profits in 2015 fall 2.9 percent to $567 million compared with 2014, according to the company’s most recent financial statements. Core earnings before interest and tax (EBIT) slipped 6.4 percent to $911 million compared with the previous year.
Revenues at the third largest container carrier also dropped 6.4 percent, from $16.7 billion in 2014 to $15.7 billion for the full year in 2015.
Shipment volumes, on the other hand, increased 6.3 percent year-over-year to 13 million TEUs.
The company attributed the drop in revenues and earnings primarily to the “sharp fall in freight rates” throughout the year, which was offset by growth in volumes. Container contract and spot rates on the major east-west trades have taken a beating over the past year due to slow global trade growth, economic uncertainty in China and Europe, and rampant overcapacity.
During 2015, CMA CGM added 26 vessels to its fleet, bringing the total number to 471 ships, and increased overall fleet capacity by 14.8 percent, from 1.65 million TEUs to 1.89 million TEUs. The carrier took delivery of 18 new ships, including six 18,000-TEU vessels it recently announced would be deployed on its Pearl River Express service between Asia and the United States West Coast starting in May.
The decision to deploy its flagship fleet of ultra-large containerships in the transpacific trade came after trial calls made by the CMA CGM Benjamin Franklin, the largest containership ever to call at any U.S. port, in December and February to the ports of Los Angeles, Long Beach, Oakland and Seattle.
“In a challenging market environment, we continued to roll out our strategy while adjusting our cost and financing structure to best effect,” Rodolphe Saadé, CMA CGM Group vice chairman, said of the results.
“The beginning of 2016 was tough and marked by freight rates under pressure. We are therefore strengthening our continuous efforts to adapt and optimize our maritime services as well as our cost reduction program.
“At the same time, we entered a decisive new stage in our development with the project to acquire NOL,” he added. “The project is progressing in line with expectations. Combined with our intrinsic capacity to deliver solid operating results, this project will make us more competitive going forward.”
CMA CGM in December made an all-cash offer of around $2.4 billion to acquire Neptune Orient Lines (NOL), parent of ocean carrier APL, from Singapore-owned investment firm Temasek Holdings.
“The projected acquisition of NOL, which operates under the APL banner, aims to reinforce the Group’s position in worldwide shipping with the complementary geographical strengths of the lines, while also boosting its competitive edge with substantial economies of scale,” the company said. “The acquisition, which is pending clearance from the various competent authorities, is progressing in line with the initially announced timeline.”
The company said previously it plans to complete the transaction sometime this summer, pending regulatory approval, but it will leave the APL brand name intact, at least in the short term. However, CMA CGM does intend to bring APL into the Ocean3 vessel sharing alliance with China Shipping, which began its own merger with fellow Chinese conglomerate COSCO to create China Lines, and UASC.
Saadé said recently CMA CGM grew its volumes in U.S. trades 30 percent to 2.3 million TEUs in 2015, and with the addition of APL, it surpass MSC and Maersk Line to become the largest container carrier in the U.S. market.
CMA CGM also noted in 2015 the company won concessions to develop container cargo terminals at ports in Kingston, Jamaica and Kribi, Cameroon along with partners Bolloré and CHEC.
Looking ahead to 2016, the company said profits will continue to be impacted by low freight rates in the major trade lanes and ocean shipping industry growth will “continue to be dependent on global macroeconomic trends.”
NEWS FLASH: CMA CGM earnings, revenues drop despite increased volumes
