SECOND QUARTER 2017: CMA CGM outperforms the market with very strong operating and financial results
- Strong increase in volumes carried + 33.3%
- Revenues up +56.8%
- Sharp increase of the group’s core EBIT margin (+11.2 pts)
- Positive net income of 219 million USD
- Positive outlook for the second half of the year
- Confirmation of an order for 9 container ships of 22,000 TEUs for delivery from the end of 2019
On the release of the financial results, Rodolphe Saadé, the CEO of CMA CGM Group, stated:
”The Group releases excellent financial results for the 2nd quarter, with a core EBIT margin sharply rising thanks to our strategy of profitable growth. Once again, CMA CGM outperforms the industry and demonstrates the excellence of its operational management as well as the relevance of its strategy. During the quarter, we also continued to support the group’s growth with the planned acquisition of Mercosul, opening up the Brazilian domestic market. The Group is also preparing for the future with the order of 9 container ships of 22,000 TEUs which will enable us to continue our development and maintain our competitiveness.”
Q2 results 2017
|Q2 – 2016|
|Q2 – 2017|
|Q2 – 2017|
|Revenue in USD billions||3.54||5.55||56.8%|
|Core EBIT** in USD millions||(81)||472||n.m.|
|Core EBIT margin||(2.3%)||8.9***%||+11.2pts|
|Net Income Group share in USD millions||(129)||219||n.m.|
|ROIC (return on invested capitals- last 12 months)||(0.4%)||5.2%||+5.6pts|
|Volumes carried in TEU*** millions||3.55||4.73||33.3%|
|Fleet capacity in TEU*** millions||2.4||2.4||+0.2%|
* Scope including the contribution of APL which was integrated in the group’s scope as of June 14, 2016
** Core EBIT excluding asset sales and depreciation and non-recurring elements
*** net of Ocean Alliance impact (slot sales and purchases for similar ammounts)
**** TEU = Twenty-foot Equivalent Unit
The Board of Directors of the French group CMA CGM, one of the world leaders in maritime container transport, met to review the accounts for the second quarter of 2017.
Q2 Activity and Financial Results
Strong increase in shipping volumes and revenue
During Q2 2017, volumes carried grew by 33.3% in comparison to Q2 2016, thanks to the integration of APL, the launch of OCEAN ALLIANCE and the industry dynamism.
The increase in freight rates on most of the Group's lines led to a significant 12.5% increase in average revenues per container in the second quarter of 2017.
The Group’s consolidated revenues hence strongly increased by +56.8% in comparison with Q2 2016, to reach 5.55 billion USD.
Upsurge in Financial Performance
Despite an increase in fuel price of almost 60%, unit costs were stable in Q2 2017 thanks to the combined effect of the operational efficiency improvement plan Agility and the synergies from the integration of APL (excluding purchases/sales of slots through Ocean Alliance).
CMA CGM reported a core EBIT margin of 8.9% to 472 million USD, showing a significant increase in comparison to Q2 2016 (+11.2pts), as well as an increase of +3.4pts in comparison to previous quarter. A year after its acquisition, APL contributes 137 million USD to these results.
CMA CGM is once again positioning itself as the best performing player in the global container shipping market in terms of core EBIT margin, as in Q1 2017.
For Q2 2017, the Group has registered a consolidated net income Group share of 219 million USD.
Highlights of Q2 2017
Launch of OCEAN ALLIANCE
On April 1st 2017, the largest operational shipping alliance, OCEAN ALLIANCE went live. With more than 40 maritime services, this operational alliance was very well received by customers, thanks to the port coverage and transit times offered.
Signing of a JV with Adani
On April 26, 2017, CMA CGM and Adani signed a joint venture agreement to jointly operate the new container terminal at the port of Mundra.
Launch of a new CMA CGM mobile app
On May 4, 2017, CMA CGM launched the new version of its mobile application for its customers, enhanced with new features, also available on tablets running on Android and IOS operating systems.
Proposed acquisition of Mercosul Line
On June 12, 2017, CMA CGM and Maersk Line announced that they have signed a binding agreement whereby CMA CGM would acquire Mercosul Line (Mercosul), one of the leading players in Brazil’s domestic container shipping market. The acquisition of Mercosul will allow CMA CGM to strengthen its service offering to and from South America, most notably in Brazil, especially on cabotage and “door-to-door” services. This proposed acquisition of Mercosul is accompanied by a new service offering between South America, Northern Europe and the Mediterranean.
Sale of Los Angeles Global Gateway South terminal
On June 30, 2017, CMA CGM signed a binding agreement for the sale of a 90% equity interest in Global Gateway South Terminal (GGS) in Los Angeles, for a cash consideration of 817 million USD to be paid at closing. Transaction terms also provide for the Group to receive additional deferred, contingent cash consideration of which sequence and quantum will depend on GGS’ future operating and financial performance. The disposal of GGS enables CMA CGM to complete the financial deleveraging plan communicated in December 2015 upon APL acquisition. This transaction is expected to close by end of 2017.
On July 3rd, 2017, S&P revised the rating of the CMA CGM group to B, with a positive outlook.
New 650 million EUR bond issue and 205 million dollars revolving credit facility
At the beginning of July, the Group issued a new bond issue for an amount of 650 million euros, in order to refinance other bonds maturities. On this occasion, the group also concluded an agreement with its core banking partners for a new revolving credit facility of 205 million USD.
Order of 9 container ships of 22,000 TEU
In order to keep pace with market growth and the Group's needs, the Board of Directors of CMA CGM has approved the order for 9 container ships of 22,000 twenty-foot equivalent (TEU). This order, of which the first ships will come into service from the end of 2019, will further reduce unit transport costs, particularly on the Asia-Europe routes.
Given the recent trend in freight rates, and excluding a significant change in fuel prices and exchange rates, CMA CGM expects to continue to improve its operating results in the second semester compared to the first semester.