CMA CGM profit reflects return to pre-pandemic market
The return to pre-pandemic market conditions means that CMA CGM’s net profit has retracted from the soaring heights in 2022. The shipping giant posted a net income of $388 million in the third quarter of 2023, slipping from $7 billion posted in the corresponding quarter last year.
Commenting on the results for the period, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, said, “The industry continued to normalize 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 digitalizing the supply chain to best meet our customers’ needs,” Saadé said.
First-half 2023 trends remained at play in the third quarter of 2023, with deteriorated market conditions in the transport and logistics industry. Revenue stood at $11.4 billion in the third quarter of 2023, with a gradual rebalancing of contributions from the Group’s maritime shipping and logistics businesses.
Sector revenues slip
Consolidated revenue from the group’s shipping operations amounted to $7.6 billion, down 51.8 per cent year on year, reflecting the ongoing normalization of freight rates. EBITDA totalled $1.6 billion, 81.6 per cent lower than in the third quarter of 2022. Average revenue per TEU amounted to $1,322, down 52.3 per cent year on year.
Volumes carried were up 0.9 per cent compared to the same period in 2022, representing a total of 5.7 million TEUs. Volumes continued to grow on the North-South and short-sea lines, while further normalizing on the East-West lines, due to inventory drawdowns in the United States and more moderate household consumption in an inflationary environment.
Revenue from logistics operations totalled $3.7 billion in the third quarter of the year. EBITDA stood at USD 348 million, a 3.0 per cent decrease year on year.
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.
Freight management activities were impacted by the declining market, which also effected the shipping segment. Contract logistics held up well, particularly in Europe. Finished vehicle logistics activities continued to perform well, supported by favourable market dynamics attributable to sustained demand, with supply chains returning to normal.
Revenue from other activities, including port terminals and CMA CGM AIR CARGO, rose by 5.3 per cent to $526 million. EBITDA was $56 million, down 58.4 per cent, mainly due to the normalization of volumes in port terminals and in particular a decrease in storage revenue linked to congestions. In addition, the air freight market was affected by higher capacity in the face of weak demand.
Investment and outlook
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.
Furthermore, the third quarter of 2023 confirmed the trend towards normalisation in the transport and logistics markets, with a return to 2019 pre-Covid conditions. Inventory drawdowns and inflation pressure continued to weigh on performance across the transport and logistics sector.
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. 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 decarbonization policy and successfully integrating the strategic investments made over the last two years. The group will also remain attentive to the geopolitical environment.