CMA CGM enjoyed a positive financial performance in first quarter (Q1) 2020. Though the volume and revenue were slightly down, but its operating margin and net result increased.
During the Q12020, CMA CGM Group revenues amounted to USD 7.19 billion, slightly down by 3% year on year. In first quarter last year (Q12019), this French company booked revenue of USD 7.41 billion.
Though the volume and revenue down, but the Group’s operating performance improved significantly. Adjusted EBITDA for the Group increased by 25% to USD 973 million, equating to a margin of 13.5%, up 3 percentage points relative to the first quarter of 2019. In Q12019, CMA CGM’s EBITDA was USD 779 million, while its equating to a margin was 10.5%.
Net result Group share was positive at USD 48 million (an increase by USD 91 million compared to the first quarter of 2019 and USD 170 million compared to the fourth quarter of 2019). The result includes a USD 185 million gain from the disposal of terminals.
Shipping revenue declined by 3.3% to USD 5.52 billion, from USD 5.71 in Q12019. Volumes carried by CMA CGM decreased by 4.6% to 4.93 million TEUs, from 5.17 million TEUs in Q12019.
Compared to the first quarter of 2019 due to the impact of COVID-19 and more specifically the shutdown of factories, particularly in Asia in February and March. Nevertheless, revenue per carried container improved slightly, due mainly to the application of fuel surcharges.
Adjusted EBITDA (excluding gain from sales) increased sharply by 31.6% over the first quarter of 2019 and reached USD 836 million. Adjusted EBITDA margin increased by 4 percentage points to 15.1%. The performance reflects the full impact of the cost reduction plan implemented throughout 2019, and still continuing during the period. The Group’s reactivity and flexibility enabled to quickly adapt the capacity of the fleet deployed in the challenging context of the COVID-19 outbreak.
Logistics (CEVA) Revenue Up, EBITDA Down
CEVA Logistics’ revenue increased by 0.6% to USD 1.71 billion, due primarily to the consolidation of CMA CGM’s logistics activities in May 2019.
The impact of the health crisis was partly offset by an increase in air charters, which ensured supply chain continuity for the Group’s industrial clients as well as the supply of medical products.
Adjusted EBITDA decreased by 4.9% to USD 137 million, representing adjusted EBITDA margin of 8%.
Good Result in a Crisis
Commending this Q1 performance and predicting the future of the business Chairman and Chief Executive Officer of the CMA CGM Group Rodolphe Saadé said appreciation of this good result within a very tough time.
“The good results of the first quarter demonstrate the strength and the resilience of the Group. During this unprecedented crisis, our customers have been able to rely on our agility, the expertise of our teams and the complementarity of our logistic and maritime offers, in order to ensure the continuity of their supply chains,” he said in a recent statement.
He further said: “Despite the uncertainty around global economy, but we anticipate an improvement during the second quarter, thanks to our operational flexibility and our discipline in terms of cost control.”
Next Focus to Exit from the Crisis
According its recently statement, the CMA CGM Group has been able to adapt to the unprecedented situation of a global pandemic by allowing its employees to continue their activities in safe conditions thanks to the required sanitary precautions.
Fully focused on customer service, the Group has also developed a range of commercial and digital solutions to adapt and protect its clients’ supply chains.
The CMA CGM Group intends to maintain a spirit of adaptation and innovation for the shipping and logistics of tomorrow with, in particular, the development of teleworking and the acceleration of digitalization in the industry.
In these unprecedented economic and health conditions, the Group continues to proactively strengthen its cash position. A syndicated loan of EUR 1.05 billion was signed with a consortium of three banks (HSBC, BNP Paribas, and Société Générale). The loan has an initial one-year maturity and an extension option for up to five additional years.
This loan, 70% guaranteed by the French State, is part of the scheme set up by the French government in response of the Covid-19 crisis and validated by the European Commission.
The Group continues to adjust its capacity and logistical resources to meet the needs of its customers in order to preserve its profitability and protect its cash flows and its liquidity.
Lockdown measures taken even more in Q2 2020 in response to the spread of COVID-19 around the world are weighing on global consumption and increase uncertainties. The Group expects volumes to decline by about 10% over the first half of the year.
“Operating performance for the second quarter, however, should show significant improvement thanks to the industry’s discipline and the Group’s cost control policy,” CMA CGM said in a press release.