CMA CGM Returns to Profit in Q4

Photo credit: CMA CGM

PARIS, March 10 (Reuters) – CMA CGM, the world’s third-largest container line, swung back to a net profit in the fourth quarter of last year, supported by a recovery in freight rates and efficiency measures taken during a prolonged downturn in shipping, the company said.

The improvement in the shipping market had continued at the start of 2017, but the sector remained fragile and CMA CGM did not plan to order any new vessels in the near term, it said in a financial results statement on Friday.

It had also delayed taking delivery of three vessels scheduled for this year until 2018, it said, after already postponing an unspecified number of deliveries from 2016.

The French group reported a net profit, including Singapore-based NOL acquired last year, of $45 million for the fourth quarter, compared with a $46 million net loss in the same period of 2015.

For the full year, it posted a net loss of $452 million including NOL, against a $567 million net profit in 2015.

The shipping industry has been sapped by vessel overcapacity and faltering economic growth, prompting consolidation efforts including CMA CGM’s $2.4 billion takeover of NOL.

CMA CGM also launched in the second half of last year a savings plan aimed at reducing costs by $1 billion within 18 months, and the group said the programme helped lower unit costs by 5 percent on a like-for-like basis, excluding fuel, in 2016.

Its full-year operating margin was slightly positive at 0.2 percent, or 0.5 percent excluding NOL.

Shipped volumes rose 20.4 percent last year including NOL, but were down 1.3 percent excluding the acquisition, with CMA CGM citing as previously a focus on profitable volumes.

Its fleet size decreased to 453 ships from 462 in 2015.

Market leader Maersk Line last month reported a underlying operating loss of $384 million in 2016, but parent company A.P. Moller-Maersk forecast a $1 billion improvement in underlying operating profit this year at its shipping unit, helped by signs of a market recovery.

CMA CGM, which is privately held by the Saade family, is also due to launch next month a vessel-sharing alliance with three Asian lines, and is also seeking to raise $1 billion from asset sales following the NOL takeover.

(Reporting by Gus Trompiz; editing by John Irish and David Evans)

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