Second quarter 2019 - The CMA CGM Group delivers solid operating performance and above-market growth in volumes, despite an uncertain worldwide geopolitical environment
- Positive net result of the Group's shipping activity
- Strong growth in volumes carried (+6.3% compared to Q2 2018 and +6.8% compared to Q1 2019), above market thanks to short-sea lines
- Solid operating performance, driven by performance improvements and cost control plan: sharp 60.1% increase in adjusted EBITDA (at constant accounting standard and excluding CEVA Logistics)
The Board of Directors of the CMA CGM Group, a leading worldwide transport and logistics group, met today under the chairmanship of Rodolphe Saadé, Chairman and Chief Executive Officer, to review the financial statements for the second quarter of 2019.
The Group’s shipping business remained strong in the second quarter, with significant improvement in volumes carried and in profitability, enabling the shipping activity to post a positive net result.
Growth in carried volumes and revenue
In the second quarter, volumes transported by CMA CGM increased by 6.3% compared to the second quarter of 2018 and by 6.8% compared to the first quarter of 2019. This positive trend, which is above market, is driven by the strong growth of intra-regional lines (short sea) and the United States lines, which remain particularly dynamic.
The Group thus relies on the network of intra-regional companies’ expertise that are leaders in their sectors:
- CNC, a specialist in Intra-Asia,
- Mercosul, a leader in cabotage and door-to-door services in Brazil.
- ANL, an expert for Australia and Oceania,
- Containerships, specialist in intra-Europe.
Second quarter revenue was up 4.6% compared to the second quarter of 2018 and reached USD 6 billion for the Group's shipping activities.
Operating performance: positive outcomes from the cost reduction plan
The deployment of the cost reduction plan allowed to reduce operational expenses by USD 51 per TEU (Twenty-foot Equivalent Unit) in the second quarter compared to the first quarter of 2019.
This mainly comes from initiatives to rationalize certain trades, the efforts to always improve operational efficiency, lower logistics costs and the reduction of the Group’s ships consumption.
Adjusted EBITDA came to USD 343.6 million and the EBIT margin amounted to 5.8%.
The net result of the shipping operations reaches USD 2.3 million.
Logistics activity: implementation of CEVA Logistics turnaround plan well underway
Following the closing of CMA CGM’s friendly public tender offer for CEVA Logistics, a new corporate governance structure was put in place, with the election of Rodolphe Saadé as Chairman of the Board of Directors on 29 April, 2019 and the appointment of Nicolas Sartini as Chief Executive Officer effective 1 June.
By consolidating the company’s management teams and support functions, the new operations centre in Marseille, which opened on 25 June, is strengthening the leadership and management of the Group’s logistics activities.
CEVA Logistics’ integration is proceeding according to the strategic plan.
The CMA CGM Group’s activity
Growth in revenue
Second-quarter revenue stood at USD 7.7 billion, a year-on-year increase of 35%. The activity of the Group’s maritime division has particularly benefited from the dynamisms of its intraregional lines and has posted a growth in volumes above global market growth.
Solid operating performance
In the second quarter of 2019, the CMA CGM Group further enhanced its operating performance, backed by the optimized use of its modern fleet of 528 vessels (at 30 June) and the responsiveness of its market-aligned organization.
Adjusted EBITDA came to USD 954 million for the period, of which USD 464 million from the impact of applying IFRS 16 and USD 147 million from the consolidation of CEVA Logistics. Excluding these two factors, adjusted EBITDA was up by a strong 60.1% year-on-year, at USD 343,6 million versus USD 214,6 million in second quarter 2018. This performance reflected both the sustained growth in revenue and the impact of the performance improvement and cost control plan under way since the beginning of the year.
Adjusted EBITDA margin improved significantly year-on-year to 12.4%, one of the best in the industry and an improvement from Q2 2018 and the first quarter of 2019.
The implementation of IFRS 16 and the recent acquisition of CEVA Logistics lead to a net result of USD -109 million for the second quarter.
In a context of geopolitical uncertainty, the CMA CGM Group continues to focus its efforts on operational efficiency, cost control and the rationalization of its industrial activities and brands. In addition, the positive momentum generated by the acquisition of CEVA Logistics will gradually enable the Group to benefit from a less volatile and more diversified environment than the maritime sector.
Thanks to all the measures put in place, the Group is confident for the second half of 2019, which should be better than the first one. The CMA CGM Group will continue to improve its financial performance and adapt its commercial offering in order to provide its customers end-to-end offers.