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CMA CGM’s net profit climbs 118.5% year-on-year to US$7.6 billion in the second quarter despite challenging global supply chains environment.
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Increased logistics investments with buyout of Ingram Micro CLS, Colis Privé and GEFCO and the strategic partnership with Air France-KLM widen service offerings
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Company says inflationary pressure and the Ukraine conflict are reining in consumer spending and slowing shipping demand, eventually impacting rates
CMA CGM’s net profit more than doubled to US$7.6 billion in the second quarter of 2022 from a year earlier, but the French transport giant warned weakening consumer spending in the West is slowing shipping demand and weighing on freight rates.
Net profit jumped 118.5% year-on-year from $3.48 billion, surpassing its $7.2 billion in the first quarter.
Higher container revenues helped offset rising operating costs in the past quarter, including a near 75% y-o-y jump in ship fuelling costs, said one of the world largest shipping companies.
CMA CGM chairman and chief executive Rodolphe Saade said in a board meeting September 2 in Marseille that the company pursued its strategy and transformation around shipping and logistics during the quarter.
“With the acquisitions of Ingram Micro CLS, Colis Privé and GEFCO and the strategic partnership with Air France-KLM, we have reached a new milestone in offering our customers a service that spans the entire supply chain,” said Saade.
But he cautioned this summer’s global decline in consumer spending “will lead to more normal international trade conditions in the second half as well as to a downturn in shipping demand.”
Revenue stood at $19.5 billion, mostly driven by shipping business. EBITDA came to $9.6 billion, representing an EBITDA margin of 49.2%.
The group continued to strengthen its balance sheet, supported by its operating performance. Net debt was US5.4 billion on June 30, 2022, down $1.5 billion from March 31, 2022.
CMA CGM carried 5.6 million TEUs in the second quarter of 2022, down 1.3% y-o-y. The company said volume growth is being dampened by the congestion in ports and overland supply chains, which has led to longer vessel transit times.
Maritime shipping revenue totalled $16 billion. EBITDA rose sharply to $9.1 billion, led by the $2,850 average revenue per TEU operating costs. In all, operating costs grew over 22% y-o-y, with unit bunker costs in particular surging almost 75%. Revenue from logistics operations totalled $3.8 billion, while EBITDA was $340 million.
The company said growth was primarily driven by the maritime and air freight management activities. The contract logistics business continued to recover. Dynamic business performance in e-commerce and other consumer & retail segments enabled CEVA Logistics to mitigate the impact of inflation.
CEVA’s revenue was lifted by the acquisitions of Ingram Micro CLS and Colis Privé that were completed in early April and contributed $375 million and 64 million respectively.
The group is closely monitoring developments in the current geopolitical situation and their consequences for the economic outlook.
“In recent weeks, inflationary pressure caused a slowdown in consumer spending, thus softening demand for maritime shipping. In some regions, these developments have led to a decline in spot freight rates,” CMA CGM said.
