CMA CGM Q3 net income drops 94%

French carrier CMA CGM reported a 94 percent decline in net income at $388 million for the third quarter ended September 30, 2023 on deteriorated market conditions in the transport and logistics industry.

Revenue declined 43 percent to $11.4 billion "with a gradual rebalancing of contributions from the Group’s maritime shipping and logistics businesses," says an official release.

"At the end of August 2023, CMA CGM completed its $2.8 billion acquisition of the GCT Bayonne and New York container terminals, renamed Port Liberty Bayonne and Port Liberty New York. CMA CGM is pursuing its voluntary investments to diversify the energy mix of its vessels, aiming to achieve Net Zero Carbon by 2050. It has already invested more than $17 billion in a fleet of nearly 120 LNG- and methanol-powered ships to be delivered by 2027."

Shipping EBITDA down 82%
Gross earnings from shipping declined 82 percent to $1.6 billion from $8.6 billion in Q32022 on 52 percent decline in average revenue per TEU at $1,322. Volumes carried were up marginally (0.9 percent) at 5.9 million TEUs. Revenue was down 52 percent at $7.6 billion.

"Volumes continued to grow on the North-South and short-sea lines while further normalising on the East-West lines due to inventory drawdowns in the United States and more moderate household consumption in an inflationary environment."

It may be mentioned here that Danish carrier Maersk reported a loss in ocean business (EBIT of negative $27 million) driven by significant pressure on rates in particular on Asia to Europe, North America and Latin America trades, and German carrier Hapag reported a 77 percent decline in nine months of 2023 profit at €3.2 billion on 45 percent decline in average freight rate.

Logistics revenue down 15%
Revenue from logistics operations declined 15 percent to $3.7 billion while EBITDA came in at $348 million, down three percent.

"The stability of the logistics business, at a time of declining trade, reflects on one hand the slowdown in freight markets and on the other hand the strengthening of the service offering and the resilience of certain activities."

Rodolphe Saadé, Chairman and Chief Executive Officer, CMA CGM Group says: “The industry continued to normalise in the third quarter with a return to pre-pandemic market conditions. Our performance remained very solid however, confirming the relevance of our growth strategy in terminals and logistics. We are consequently more resilient as we enter this new cycle.

"The slowdown in the global economy is expected to continue weighing on our industry in the period ahead but volumes carried are still robust. We remain committed to controlling our operating costs, and are continuing to focus on decarbonizing and digitising the supply chain to best meet our customers' needs.”

Outlook
Macroeconomic forecasts point to a relative resilience in global economic activity in 2023, albeit at a level below the historical average but they do not anticipate a recovery in 2024, the release added. "However, this outlook contrasts with an expected rebound in world trade in 2024. New capacity expected on the market in 2024 will likely continue to pull down freight rates.

"In this context, CMA CGM will continue to focus on maintaining operating cost discipline, rolling out its decarbonisation policy and successfully integrating the strategic investments made over the last two years. The Group will also remain attentive to the geopolitical environment."