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Robert.Jervis_43227 Nov 22

CMA CGM profit jumps in Q3 2021 on rising freight rates

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CEVA Logistics continues to improve as well
During the third quarter, the Group's consolidated revenue reached USD 15.3 billion, representing an 89.4% increase compared with the third quarter of 2020. This performance was mainly driven by the Group's shipping activities. 

EBITDA came in at USD 7.1 billion, representing an EBITDA margin of 46.4% (a 25.4 point increase compared with the third quarter of 2020).

The Group continued to strengthen its financial structure. Net debt stood at USD 11.9 billion on September 30, 2021, down USD 4.9 billion from December 31, 2020. Just after the close of the quarter, on October 15, 2021, the Group redeemed its bond maturing in 2025 for an amount of EUR 750 million.

During the third quarter of 2021, the Group transported 5.5 million TEUs. This represented a 2.5% decrease compared with the third quarter of 2020 when global trade rebounded markedly following the end of Covid-related lockdowns in Western countries. Growth in volumes is currently constrained by congestions affecting port terminals and inland infrastructures, leading to longer transit times for vessels. 

The Group's shipping revenue reached USD 12.5 billion, representing a 101% increase compared with the same period in 2020.

EBITDA for shipping was USD 6.8 billion. The EBITDA margin reached 54.4%, a 30-point increase compared with the third quarter of 2020, driven by average revenue per TEU of USD 2,293 and despite higher operating expenses (notably bunkers, vessel chartering costs, port handling).

Logistics revenue reached USD 2.9 billion, representing a 55% increase compared with the third quarter of 2020. This performance was driven by freight management services, and in particular the Ocean segment in what was a favorable market backdrop, as well as, to a lesser extent, the continued turnaround in contract logistics activities which had been negatively impacted by lockdown measures relating to the Covid-19 pandemic in 2020.

EBITDA was up 63% at USD 274 million.

CEVA has continued its upturn, in line with its transformation plan. 

Commenting on the results just released for third quarter 2021, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, said: 

“We delivered very good financial results this quarter, enabling us to continue our development and accelerate our transformation. 

“In an unprecedented context of strong tensions in global supply chains, our priority remains to support our customers with a complete range of solutions addressing their increased needs for shipping and logistics.”

In response to strong pressure on supply chains and to support the growth of the transport market in the coming years, the Group has continued with its investments to strengthen its shipping, port and airfreight logistics network. These investments will allow CMA CGM to provide comprehensive solutions and improve the quality of service in order to optimize its strategic development for the years to come while also pursuing its actions to promote the energy transition. With this ambitious investment program, the Group aims to build supply chains to serve the global economy.

Outlook 

The pressure on effective shipping capacity for consumer goods observed since the summer of 2020 is expected to persist until at least the first half of 2022. The Group will continue to invest in strengthening and upgrading its shipping and logistics network while bolstering its financial structure. 

As part of its commitment to customers around the world, the Group will continue to deploy solutions to support their business activities and ensure the continuity of their supply chains. 

The current context is thus likely to enable the Group to achieve an even stronger financial performance during the fourth quarter.

Air

Launched in February 2021, the airfreight division CMA CGM AIR CARGO currently operates four Airbus A330-200F, and will receive two new aircraft in spring 2022. 

The Group continues to develop its freight business for the years ahead and has ordered four Airbus A350F. CMA CGM will be launch airline for this new aircraft. With a carrying capacity of more than 100 tons and an operating range of some 9,000 kilometers, the A350F will enable CMA CGM AIR CARGO to reinforce its long-haul offer, to better meet the needs of its customers and their markets. With its state-of-the-art technologies and, in particular, optimized fuel consumption the A350F will, upon delivery, offer the best environmental performances in the airfreight sector both in terms of noise and CO2 emissions.

The Group has decided to make CMA CGM AIR CARGO a French freight airline. In this regard, CMA CGM AIR CARGO has filed an application for an Air Operator Certificate (AOC) with the French Civil Aviation Authority (DGAC - Direction générale de l’aviation civile). In addition, the new aircrafts that will join the Group's fleet in spring 2022 will be registered in France and will be based at Paris-Charles de Gaulle airport. 

The creation of a French freight airline also requires the initial recruitment of around fifty pilots who will join the CMA CGM Group during the coming weeks, and the implementation of a structure dedicated to the Group's airfreight operations.

Rail

Moreover, during the third quarter of 2021, CMA CGM acquired Continental Rail, a rail freight operator in Spain, while CEVA Logistics acquired Cargex, a perishable goods expert in Columbia to enhance its Latin America offering.

Ports

CMA CGM's port operation strategy aims to support the growth of its shipping trade lanes and further improve the quality of service provided to its customers. In the current context of global trade congestion, the Group has improved its overall management of logistic chains thanks to several port investment projects launched since the beginning of the year:
 
  • Signing of the acquisition of 90% of the Los Angeles Fenix Marine Services terminal, one of the largest port terminals in the Los Angeles/Long Beach region and a major gateway for US imports,
  • 35-year concession agreement for the new container terminal at Khalifa Port in Abu Dhabi, 
  • Signing of a long-term joint venture to equip and operate the new container and general cargo Tahya Misr terminal at the Port of Alexandria,
  • Acquisition of the company which operates the Port of Tripoli's container terminal in Lebanon,
  • Acquisition of a 50% stake minus one share in Spain's Total Terminal International Algeciras (TTIA) port terminal, which is strategically located on the Mediterranean side of the Strait of Gibraltar.
The Group holds stakes in 49 port terminals across 27 countries, via its two subsidiaries CMA Terminals and Terminal Link (joint venture)