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Ocean Carriers

CMA CGM Announce Positive Core EBIT Margin, Despite a Highly Challenging Market Environment

CMA CGM Announce Positive Core EBIT Margin, Despite a Highly Challenging Market Environment
Danny Gill

CMA CGM have reported a 2.9% increase in volumes during the first quarter, to 3.2 million TEU, beating the market which grew by 1.2%, and focused on maintaining its core EBIT margin.

CMA CGM continued to implement its cost control policy, once again reducing its unit costs in the first three months of the year. This enabled the Group to achieve core EBIT of $3 million despite challenging conditions. The Group reported a net loss of $100 million in first-quarter 2016.

In response, they have targeted $1 billion in cost cuts to keep operating margins positive during the current market downturn. Weak freight rates have been a large contributor that have left many lines operating at a loss. Still looking for opportunities, CMA CGM is in the midst of acquiring Singapore’s Neptune Orient Lines (NOL) for $2.4 billion and announced a global vessel-sharing alliance with three other Asian lines. Still, container shipping has been weakened by oversupply of vessels ordered during a previous boom, along with faltering global economic growth.

“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,” said Rodolphe Saadé, Vice-Chairman of CMA CGM.

CMA CGM also noted that freight rates on Asia-Europe and Asia-Mediterranean routes had improved slightly since the start of May 2016 but the market “remains fragile”.

Ocean Carriers
Danny Gill

Danny is currently a Contributing Writer for Airfreight Logistics and Logistics Manager (LM) and is quite the foodie. He’s always on the hunt for new and exciting dishes to sample, and is never one to back down from a spicy challenge. His travels have taken him around the world, and he’s been able to experience many different cultures (and food).

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