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Robert.Jervis_43227 Aug 31

Stellar results from CMA CGM in Q2

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Group also pursued “further deleveraging initiatives”
The strong rebound of global economy has resulted in unprecedented demand for transportation and logistics services. In this context, the CMA CGM Group achieved what it sees as excellent results in Q2, thanks to the mobilisation of its teams. Container shipping performance was driven by higher volumes and freight rates, whilst CEVA Logistics continued to improve its operational and financial performance and posted a sharp revenue increase.
Q2, 2021 revenue totalled US$12.4 billion, up 77% as compared to Q2, 2020, which was marked by the sharp slowdown in international trade due to the COVID-19 pandemic and lockdown measures. This performance was supported by the Group’s shipping activities and, to a lesser extent, by the logistics activities.
Demand for shipping and logistics services has rebounded significantly since the second half of 2020 due to the shift in household consumption, particularly in Western countries, towards consumer goods at the expense of services which continue to be impacted by COVID-19 restrictions. This sudden increase in demand, combined with the effects of the pandemic, particularly on port operations, has resulted in global supply chain congestion at sea, in ports and on land.
EBITDA came in at US$4.6 billion, representing an EBITDA margin of 37%, up 19.7 points versus Q2, 2020. Net income, Group share, stood at U$3.5 billion. The Group continued to strengthen its financial structure with further deleveraging initiatives in the amount of US$725 million during the quarter. Net debt stood at US$14.9 billion as of 30 June 2021, down US$1.9 billion since 31 December 2020.
In Q2, 2021, the Group transported 5.7 million TEUs, an increase of 19% over Q2, 2020, which had been heavily impacted by the downturn in global trade, and an increase of 4% over Q1, 2021. Container shipping activity was particularly dynamic on the Transpacific, Latin America and Intra-Regional routes.
Container shipping revenue increased 89% year-on-year to US$10 billion, driven by the increase in volumes and unit revenue. EBITDA for container shipping totalled US$4.3 billion. EBITDA margin improved to 43%, up 24 points as compared to Q2, 2020, supported by average revenue per TEU of US$1,756.
Logistics revenue rose by 40% year-on-year and totalled US$2.4 billion. This performance was driven by freight management services in a supportive market environment and, to a lesser extent, by the recovery of the contract logistics activities which had been severely impacted by the lockdown measures related to the COVID-19 pandemic in Q2, 2020. EBITDA rose by 35% to US$210 million. CEVA’s turnaround continues quarter after quarter in line with the IMPACT 2020 transformation plan. This plan is designed to enhance the commercial strength of CEVA, primarily via cross-selling to the CMA CGM customer base with a special focus on the Consumer & Retail, healthcare and eCommerce segments, and to improve CEVA’s operational efficiency and cost-to-serve.
While pressure on global supply chains is likely to persist, the Group's strong performance enables it to accelerate its logistics transformation and investments in industrial assets. It is pursuing the effort initiated over Q3, 2020 to increase capacity and meet customers' needs.
In light of the growth in international trade, the Group is accelerating its strategic transformation and its investments in order to offer global, agile and innovative solutions to its customers. The Group continues to improve the quality of its services and offers alternatives to its customers in a context of ongoing tensions on global supply chains. It is therefore pursuing its investments in order to strengthen its transportation offering.
Since the beginning of the year, the CMA CGM Group has taken delivery of 1) eight new owned vessels, including the last five of its fleet of nine 23,000 TEU (twenty-foot equivalent units) vessels powered by liquefied natural gas (LNG). The Group is deploying all of its nine 23,000 TEU vessels between Asia and Northern Europe; 2) one new chartered 15,000 TEU vessel and 3) 15 second-hand vessels. In addition, the Group has added more than 520,000 containers to its fleet in one year, an increase of 13%.
During the quarter, CMA CGM AIR CARGO, the Group’s air freight division, expanded its network of destinations served from Europe with its four Airbus A330-200F aircraft: Chicago, New York, Atlanta, Dubai and Istanbul. In order to support the development of CMA CGM AIR CARGO and the opening of new destinations, the Group is planning for the arrival of an additional aircraft by the end of the year and new equipment in 2022.
Already present in ten Latin American countries where it employs nearly 10,000 staff members, CEVA Logistics is boosting its development in the region with the acquisition of Cargex. This acquisition enhances CEVA Logistics’ offer in the perishable commodities market in Latin America.
Looking ahead, the constraints on effective container shipping capacity for the transport of consumer goods, experienced since the summer of 2020, are expected to continue until the first half of 2022. The Group will continue to invest in reinforcing and upgrading its shipping and logistics network while strengthening its financial structure. By the end of 2021, the Group will take delivery of 1) six new 15,000 TEU owned vessels; 2) three new chartered 15,000 TEU vessels, including the first two of an order of six intended for the China-US West Coast routes and 3) 17 second-hand vessels. Committed to its 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 environment should therefore allow the Group to continue to further improve its results in H2, 2021