CMA CGM: Solid operating performance and resilient business activity

08 Jun 2020 10:36 Shipping News

  • Operating margin increase to 13.5% and positive net result of USD 48 million.
  • Significant strengthening of liquidity in line with defined targets.
  • Effective cost control and prompt adaptation of deployed capacity in response of evolving market conditions.
  • The CMA CGM Group sets an objective to become carbon neutral by 2050.
The Board of Directors of the CMA CGM Group, a world leader in shipping and logistics, met under the chairmanship of Rodolphe Saadé, Chairman and Chief Executive Officer, to review the financial statements for the first quarter of 2020.
Upon the release of 2020 first quarter results, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, commented: “The good results of the first quarter demonstrate the strength and the resilience of the Group. During this unprecedented crisis, our customers have been able to rely on our agility, the expertise of our teams and the complementarity of our logistic and maritime offers, in order to ensure the continuity of their supply chains. Despite the uncertainty around global economy, we anticipate an improvement during the second quarter, thanks to our operational flexibility and our discipline in terms of cost control. The current situation reinforces our conviction that it is essential to develop better balanced economic exchanges, whilst respecting the environment. We have set Carbon neutrality by 2050 as our objective and we are ready to face future challenges.” 

The Group reacts and adapts to the COVID-19 health crisis
The world economy and global trade flows have been severely impacted by the COVID-19 outbreak, through factory closures in Asia, followed by lockdown measures, particularly in Europe and North America. During the first quarter, CMA CGM saw only a limited decline in volumes of 4.6%, demonstrating the resilience of the shipping industry. The Group managed to promptly adapt its deployed capacity to the current environment while protecting the supply chains of its customers. The Group leveraged its expertise to maintain the transportation of essential goods, particularly medical products, by building logistical bridges.

CEVA Logistics: the turnaround and transformation plan continues to make progress
A new phase in CEVA Logistics' plan to return to profitability has been launched. The execution of this plan includes several actions, including revitalising business development, reducing costs, and modernising industrial assets and systems. The COVID-19 crisis has confirmed the relevance of our strategy consisting in offering complementary maritime transport and logistics services, namely CEVA Logistics' commercial offering, particularly in terms of air freight and warehousing. 

Disposal of a first portfolio of eight port terminals to Terminal Link for a cash amount of USD 815 million
The sale of two additional terminals covered by the agreement between CMA CGM and China Merchants Port (CMP) should be closed by this Summer.

The Group is doing its part to improve air quality, in full compliance with the International Maritime Organization Low Sulphur Regulation (IMO 2020)
As of the 1st of January, 2020, the Group implemented a wide range of measures that were financed by the full application of dedicated tariff adjustments (Bunker Adjustment Factors).  

Business activity and financial performance for the first quarter of 2020
Group: Net profit Group share of USD 48 million
Q1 2019Q1 2020
Revenue, in USD billion7.417.19(3.0)%
Adjusted EBITDA(1), in USD million77997324.9%
Adjusted EBITDA margin10.5%13.5%+ 3.0 pts
Net income, Group share, in USD million(43)48+ 91
Net cash flow from operating activities, in USD million715845+ 130
(1) EBITDA before plus/(minus) disposal of fixed assets and subsidiaries
During the first quarter of 2020, in the context of a slowdown in world trade and a decline in carried volumes, CMA CGM Group revenues amounted to USD 7.19 billion, slightly down compared to the same period last year. This contained decrease is achieved thanks to the diverse range of industries in which the Group’s customers operate, a balanced global presence, and the complementary nature of the Group's shipping and logistics activities. 

The Group's operating performance improved significantly. Adjusted EBITDA for the Group increased by 25% to USD 973 million, equating to a margin of 13.5%, up 3 percentage points relative to the first quarter of 2019.  Net result Group share was positive at USD 48 million (an increase by USD 91 million compared to the first quarter of 2019 and USD 170 million compared to the fourth quarter of 2019). The result includes a USD 185 million gain from the disposal of terminals. 

Shipping: Strong increase in Adjusted EBITDA margin to 15.1%
Q1 2019Q1 2020
Carried volumes, in million TEU(2)5.174.93(4.6)%
Revenue, in USD billion5.715.52(3.3)%
Adjusted EBITDA, in USD million63583631.6%
Adjusted EBITDA margin11.1%15.1%+ 4.0 pts
(2) Twenty-Foot Equivalent Unit (TEU)
Shipping revenue declined by 3.3% compared to Q1 2019 to USD 5.52 billion. Volumes carried by CMA CGM decreased by 4.6% compared to the first quarter of 2019 due to the impact of COVID-19 and more specifically the shutdown of factories, particularly in Asia in February and March. Nevertheless, revenue per carried container improved slightly, due mainly to the application of fuel surcharges.

Adjusted EBITDA (excluding gain from sales) increased sharply by 31.6% over the first quarter of 2019 and reached USD 836 million. Adjusted EBITDA margin increased by 4 percentage points to 15.1%. The performance reflects the full impact of the cost reduction plan implemented throughout 2019, and still continuing during the period. The Group's reactivity and flexibility enabled to quickly adapt the capacity of the fleet deployed in the challenging context of the COVID-19 outbreak.

Logistics: CEVA Logistics shows resilience in a disrupted market
Q1 2019Q1 2020
Revenue, in USD billion1.701.710.6%
Adjusted EBITDA, in USD million144137(4.9)%
Adjusted EBITDA margin8.5%8.0%(0.5) pts
CEVA Logistics’ revenue increased by 0.6% to USD 1.71 billion, due primarily to the consolidation of CMA CGM’s logistics activities in May 2019.
The impact of the health crisis was partly offset by an increase in air charters, which ensured supply chain continuity for the Group's industrial clients as well as the supply of medical products.
Adjusted EBITDA decreased by 4.9% to USD 137 million, representing adjusted EBITDA margin of 8%.
Recent events and outlook
The CMA CGM Group has been able to adapt to the unprecedented situation of a global pandemic by allowing its employees to continue their activities in safe conditions thanks to the required sanitary precautions. Fully focused on customer service, the Group has also developed a range of commercial and digital solutions to adapt and protect its clients’ supply chains. The CMA CGM Group intends to maintain a spirit of adaptation and innovation for the shipping and logistics of tomorrow with, in particular, the development of teleworking and the acceleration of digitalization in the industry.

A bolstered liquidity position
In these unprecedented economic and health conditions, the Group continues to proactively strengthen its cash position. A syndicated loan of EUR 1.05 billion was signed with a consortium of three banks (HSBC, BNP Paribas, and Société Générale). The loan has an initial one-year maturity and an extension option for up to five additional years. This loan, 70% guaranteed by the French State, is part of the scheme set up by the French government in response of the Covid-19 crisis and validated by the European Commission. 

Adaptation of deployed fleet and cost reduction
The Group continues to adjust its capacity and logistical resources to meet the needs of its customers in order to preserve its profitability and protect its cash flows and its liquidity. 

Operating performance is expected to increase in the second quarter
Lockdown measures taken even more in Q2 2020 in response to the spread of COVID-19 around the world are weighing on global consumption and increase uncertainties. The Group expects volumes to decline by about 10% over the first half of the year. Operating performance for the second quarter, however, should show significant improvement thanks to the industry's discipline and the Group's cost control policy. 

The Group pursues its strategy and reaffirms its pioneering role in the energy transition
The CMA CGM Group intends to pursue and strengthen its strategy that relies around four major objectives:
  • Controlling every stage of the supply chain to offer end-to-end solutions to its customers.
  • Promoting the regionalisation of trade which accounts for a growing portion of the business.
  • Driving the digital transformation of shipping and logistics industry.
  • Accelerating the industry’s energy transition.
In particular, the Group is strengthening its commitment in favour of more balanced and environmentally friendly global trade. At a United Nations conference held on June 2, 2020, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, announced the Group's target to be carbon neutral by 2050.  Alternative fuels are expected to account for 10% of the Group's fuel consumption by 2023. 2020 will mark a major step with delivery of the first 23,000-TEU container ships powered by Liquified Natural Gas (LNG), allowing to reduce CO2 emissions by about 20% and eliminate nearly all sulphur and fine particle emissions. Thanks to its operational efficiency, financial discipline, and business agility, the CMA CGM Group is ready to face uncertainties related to the current environment.
Led by Rodolphe Saadé, the CMA CGM Group is a world leader in shipping and logistics.
Its 489 vessels serve more than 420 ports on five continents around the world and carried nearly 22 million TEUs (twenty-foot equivalent units) in 2019. With CEVA Logistics, a world leader in logistics services, CMA CGM handles more than 500,000 tons of airfreight and 1.9 million tons of inland freight every year. CMA CGM is constantly innovating to offer customers new maritime, inland and logistics solutions. Present on every continent and in 160 countries through its network of 755 offices and 750 warehouses, the Group employs 110,000 people worldwide, of which 2,400 in Marseille where its head office is located.

CMA CGM: Solid operating performance and resilient business activity

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