CMA CGM posted higher than expected profits in Q1 2017

CMA CGM vesselThe French container carrier CMA CGM posted higher than expected profits in Q1 2017, supported by the integration of company shipping line NOL and higher freight rates. The first-quarter net profit of the company amounted to 86 million USD, compared to 100 million loss during the same period last year and 45 million USD profit reported in previous quarter. CMA CGM carried 4.27 million TEU in Q1 2017, which represent an increase of 34.2% yoy, mostly being supported by the integration of APL, as the as French container carrier’s traffic shrank by 2.2% to 3.11 million TEU. The decline in CMA CGM’s traffic shows that the carrier has prioritized higher-paying freight over gaining market share. The sales of CMA CGM rose by 35.9% from the year-earlier period to 4.62 billion USD.

“In the current shipping context, which is still affected by insufficient freight rates, CMA CGM has continued its positive trend begun end 2016, with further improvement in operating margins and net income”, commented the CEO of CMA CGM, Rodolphe Saade. “For the first time and less than a year after its acquisition, APL has contributed positively to our Group’s results. Although the shipping industry still faces strong headwinds, we are confident our strategy should allow to improve operational results over the next quarter, leveraging the new Ocean Alliance and maintaining our focus in operational efficiency and innovation to the benefit of our customers”, added he.

The world’s third-largest container line CMA CGM said in its results statement that it was confident operating profits would rise further in the current quarter. The company’s core earnings before interest and tax (EBIT) reached 252 million EUR, which is 3 million USD more than an year earlier. The group EBIT margin rose to 5.5% from 4.2% in the prior quarter.

Unit costs fell again, despite higher fuel prices. CMA CGM is aiming to reduce its overall costs by 1 billion USD in an 18-month plan that runs to the end of 2017, and has also pledged significant synergies from the integration of NOL.