CMA CGM has released its financial and operational results for Q1, 2016 in which its revenue came in at $3.4 billion for the period, down as compared to Q1, 2015 when the group benefited from particularly favourable freight rates and volumes, as well as a net loss of $100 million in Q1, 2016.
CMA CGM has initiated a new plan to cut costs by US$1 billion within 18 months. The programme is set to be rolled out in 2016.
Volumes increased by 2.9% during Q1 to 3.2 million TEU, beating the market, which grew by 1.2%.
The increase in volumes is mainly attributable to growth in the Transatlantic and Transpacific lines operating to and from the US, which offset the decrease in volumes carried between Asia and Europe, where the group had scaled back its capacity in response to weaker demand.
In an environment characterised by strong pressure on freight rates, average revenue per TEU fell 17.6%, a decrease that remains smaller than the average decline in the group's benchmark indices and reflects the ongoing imbalance between supply and demand.
This enabled the group to achieve core earnings before interest and tax of $3 million despite challenging conditions.
Rodolphe Saadé, Vice Chairman of CMA CGM, said: “In a very difficult environment, we have in the first quarter recorded an increase in volumes above the market average, while maintaining a positive core EBIT margin.
“We will continue our strict financial discipline, including the implementation of a significant cost reduction plan. In addition, we are moving forward on our strategic projects, namely the proposed acquisition of NOL and the creation of a new operational alliance OCEAN with a launching anticipated in April, 2017.”
The recent trend on the Asia-Europe and Asia-Mediterranean lines shows a slight improvement in its freight rates since May 1, 2016, but the environment remains fragile.
CMA CGM continued with the proposed acquisition of NOL and has already received some of the required clearance from the relevant regulatory authorities.
PTI previously reported that the European Commission had cleared the way for CMA CGM to acquire NOL for US$2.5 billion.
The project aims reinforce the group's leading position in the industry and create major synergies.
In a previous article by PTI, CMA CGM announced it was forming the Ocean Alliance operational partnership with Cosco Container Lines, Evergreen Lines and Orient Overseas Container Lines.
The alliance will contain a fleet of 360 vessels that will operate across 40 shipping lines, and will offer services on the major global shipping routes, including Asia-Europe, Asia‑Mediterranean, and Asia-Middle East. It is expected to be launched in April 2017, following clearance from the regulatory authorities.
Fact File: CMA CGM was founded and led by Jacques R. Saadé. Its 448 vessels call more than 420 ports in the world, on all 5 continents. In 2015, they carried 13 million TEUs (twenty-foot equivalent units).