Finance

THIRD QUARTER 2018 FINANCIAL RESULTS: CMA CGM continues its growth in a more balanced market and accelerates its logistics strategy with CEVA

3rd Quarter Results

  • Volumes up 5.5%
  • Revenue up 6.3%
  • Operating margin : 4.0%
  • Net income : USD 103.1 million


Upon the release of its third-quarter results, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group stated:

"In a context of sharply rising fuel prices, CMA CGM core EBIT margin recorded a significant increase compared to the second quarter of 2018, at 4.0%. In a market growing by 2.5% to 3%, the increase in volumes shipped by CMA CGM demonstrates our commercial drive and the quality of service offered to our customers.

We continue to pursue the development of the CMA CGM Group.

By strengthening the partnership with CEVA, CMA CGM is actively engaging its logistics strategy. Our ambitious development project for CEVA was approved by its Board of Directors. Subject to approval from the regulatory authorities, this project will accelerate CEVA’s transformation, making it a more efficient logistics leader, to the benefit of its customers, employees and shareholders. Via a takeover bid, we hope to obtain the majority of CEVA's share capital and unleash its full potential.”

Q3 - 2017 Group Q3 - 2018 Group Variation
Revenue in USD billions 5.70 6.06 +6.3%
Operating income* in USD millions 568 241 (57.5)%
Core EBIT margin 10.4% 4.0% (6.4) pts
Net Income Group share in USD millions 323.3 103.1 (68.1)%
ROIC (return on invested capital) 10.4% 4.6% (5.8) pts
Volumes carried in TEU** millions 4.98 5.26 +5.5%
Vessel fleet 489 506 +3.5%
Fleet capacity in TEU** millions 2.50 2.69 +7.5%

* Core EBIT excluding asset sales and depreciation and non-recurring items

** Twenty-Foot Equivalent Unit (TEU)

*** On 30 September

Q3 2018 OPERATING AND FINANCIAL PERFORMANCE


Continued increase in volumes shipped and revenues

In the third quarter, volumes shipped by CMA CGM recorded a growth of +5.5% compared to the 3rd quarter of 2017. Over the period, CMA CGM exceeded 5 million containers shipped. This increase is attributable to the strength of most of the trades, particularly the Transpacific, India/Oceania and Africa lines.

Revenue per container in the third quarter of 2018 increased slightly compared to the third quarter of 2017 (0.8%), as well as compared to the second quarter of 2018 (+4.9%).

Consequently, revenue in the third quarter of 2018 rose by +6.3% to USD 6.06 billion.

Unit costs rose by +7.7% (+USD 77 per TEU), mainly due to the market price of fuel, resulting in an increase of USD 55 per TEU compared to the third quarter of 2017. This was only partially offset by the introduction of an Emergency Bunker Surcharge.


Significantly improved financial performance

CMA CGM posted third-quarter 2018 operating income of USD 241 million, representing a core EBIT margin of 4.0%, as compared to 1.2% in the previous quarter. This confirms the performance improvement announced last September for the second half of the year.

This performance is the result of the Group's ability to leverage its size and global network to maximize its revenues, despite the rise in fuel price.

The Group’s share of consolidated net income amounts to USD 103.1 million in the third quarter, up from USD 22.7 million in the previous quarter.


HIGHLIGHTS AND RECENT EVENTS


Maritime Development


Inauguration of the Group's new flagship, the CMA CGM ANTOINE DE SAINT EXUPERY

On 6 September, CMA CGM's flagship, the CMA CGM ANTOINE DE SAINT EXUPERY, was inaugurated in Le Havre by Bruno Le Maire, Minister of Economy and Finance, and Rodolphe Saadé, Chairman and CEO of the CMA CGM Group. With a capacity of 20,600 TEUs (twenty-foot equivalent units), this ship is a symbol of the drive, development and competitive strength of the CMA CGM Group.


Closing of the acquisition of Containerships, the leading intra-regional shipper in Northern Europe

Through this acquisition finalised on 31 October, CMA CGM pursues its development strategy aimed at densifying the Group's regional coverage. The Containerships network will effectively complement the CMA CGM offering, and more particularly that of its subsidiary MacAndrews, which already operates on intra-European lines. The Finnish company, specializing in the intra-European short sea market, will take delivery of four vessels powered by liquefied natural gas (LNG) in the coming months.


Digitalization


The Group has continued its digital strategy aimed at differentiating itself from its competitors, supporting its development, and boosting performance.


Inauguration of the start-up incubator ZeBox

CMA CGM’s start-up incubator ZeBox, initiated by Rodolphe Saadé, was launched in Marseilles on 27 September in the presence of Elizabeth Borne, French Minister of Transport. The objective of this incubator is to support start-ups in their development through a strong network of partners, thereby enabling large companies to benefit from their innovations.


Artificial Intelligence

The Group has signed an agreement with SHONE. This US based start-up is working on embedding artificial intelligence onboard ships. This partnership should facilitate the crew’s tasks in terms of decision-making support, steering and maritime safety.


Connected Objects

CMA CGM has rolled out its offer of connected containers, using Traxens technology. This technology allows real-time monitoring of the container's position, the intensity of impacts sustained, changes in temperature and humidity, and the detection of doors being opened.


Blockchain

CMA CGM and its subsidiaries have signed a number of agreements to develop Blockchain technology in the shipping industry. More particularly, CMA CGM is developing a project for blockchain-secured electronic “bill of lading” with the start-up BuyCo, in which the Group has recently invested.


CEVA LOGISTICS: STRATEGIC PARTNERSHIP STRENGTHENED WITH CMA CGM’s EQUITY STAKE INCREASED TO 33%


As CEVA's major shareholder since the company's IPO in May 2018, CMA CGM signed a new cooperation agreement with CEVA on 24 October to strengthen their development project. All CEVA shareholders will benefit from the substantial value creation expected from this project, as CEVA’s shares should remain listed. This agreement will permit CEVA to accelerate its transformation via a strengthened development project.


This agreement also provides for the lifting of the tag-along obligation and the launching of a takeover bid by CMA CGM. At CHF 30 per CEVA Logistics share, this bid is aimed at shareholders wishing to sell their shares and not wait for the value creation resulting from the plan proposed by CMA CGM, which should be announced no later than 30 November 2018. The effective completion of the takeover bid is subject to regulatory approval.