CMA CGM Cautions On Sanctions And War Fallout
by Gus Trompiz (Reuters) CMA CGM on Friday said intense shipping demand that swelled its earnings last year was continuing in early 2022 but the war in Ukraine was making the market outlook uncertain.
Like other shipping groups, CMA CGM has halted services in Ukraine and Russia due to the war and related sanctions imposed by the West on Moscow.
Earlier on Friday, the French group said it was also suspending services to and from Russian ally Belarus.
The suspension of services in the three countries, which represent about 2% of its sales, has not had a material effect on its results so far but CMA CGM said it was unable to predict the impact if the geopolitical and macro-economic context were to deteriorate.
To assist humanitarian efforts, the group will make its air cargo capacity available to transport aid to Poland for Ukrainian refugees, it added.
Privately held CMA CGM, one of the world’s largest container lines, reported a net profit of $17.9 billion for 2021 against $1.8 billion the previous year.
An economic rebound following the coronavirus pandemic has sent freight rates soaring and left shipping capacity stretched.
At CMA CGM’s main ocean shipping business, increased revenue last year offset rising costs, which were up nearly 30% year on year in the fourth quarter, it said.
To help customers with shipping costs, the group said it would extend a current freeze on spot freight rates to June 30 and also allocate capacity for small firms.
Shipped volumes rose 5% over 2021 but were down 4.3% year on year in the fourth quarter as port congestion curbed capacity, it said.
Soaring earnings have allowed CMA CGM to increase investments, notably in expanding in non-maritime logistics, and cut its debt.
The company expects to invest $14 billion this year, including $5 billion for previously announced acquisition deals, after spending about $10 billion last year on modernising its fleet.
Group net debt on Dec. 31 was $7.7 billion, down $9.2 billion from a year earlier.
(Reporting by Gus Trompiz; Editing by GV De Clercq and Mark Porter, Reuters)
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