The Board of Directors of the CMA CGM Group, a world leader in shipping and logistics, has met under the chairmanship of Rodolphe Saadé, Chairman and Chief Executive Officer, to review the financial statements for the third quarter of 2019.
A solid operating performance in third quarter 2019
Sustained 5.1% growth in volumes carried
In the third quarter of 2019, revenue rose by 25.8% year on year to reach USD 7,623.9 million, while volumes carried by CMA CGM were up 5.1% compared to the third-quarter 2018. This growth comes primarily from the growth of the Group short sea business (integration of Containerships) and a push to rebalance our trades to help reduce our OPEX.
Solid operating performance and faster deployment of the cost reduction programme
During the third-quarter of 2019, the Group further enhanced its operating performance, led by its shipping activity. In particular, this reflected the optimised use of its state-of-the-art fleet and the ability to adapt its organisation to market developments.
Ongoing deployment of the performance improvement plan delivered a further reduction in unit operating costs of USD 25 per twenty-foot equivalent unit (TEU), compared with the second quarter of 2019 and of USD 89 per TEU, compared to the third quarter of 2018.
Core EBITDA came in at USD 1,011.6 million as reported, and at USD 384 million, up 5.3%, excluding the impact of IFRS 16 and the contribution from CEVA Logistics. The Group’s EBITDA margin reached 13.3%, representing a significant improvement on third quarter 2018.
Net profit from shipping operations increased sharply to USD 158.9 million, versus USD 103.1 million in the prior-year period. The Group’s profit in the third quarter represented USD 45.4 million.
Sustained implementation of CEVA Logistics’ turnaround plan
CEVA Logistics’ integration is proceeding according to the strategic plan. The new Marseille-based operations centre is enabling the Group to leverage the disciplined management of its logistics operations and generate revenue synergies with the signing of several new contracts. However, CEVA Logistics’ exposure to the automotive and technologies industries is continuing to dampen demand in both the Freight and the Contract Logistics services segments. In addition, the significant investments made to transform CEVA Logistics are also weighing on margins in the short term.
A stronger balance sheet
In line with the CEVA Logistics acquisition financing plan, the Group has lightened its capital structure by divesting and refinancing certain of its assets. These transactions should enable the Group to raise more than USD 2 billion in cash by mid-2020, extend the Group’s debt maturities and reduce its net debt by more than USD 900 million.
The plan includes:
USD 860 million from vessel sale and leaseback transactions (of which USD 650 million already completed during Q3 2019 and an additional USD 210 million scheduled to close over the coming weeks). The proceeds will primarily be used to pay down the loan contracted to acquire CEVA Logistics, with the balance currently standing at USD 200 million.
USD 968 million from the sale of stakes held by CMA CGM in ten port terminals to Terminal Link, a joint venture (set up in 2013 and owned 51% by CMA CGM and 49% by China Merchants Port) that currently holds stakes in 13 port terminals. Terminal Link will finance these acquisitions through a capital increase of USD 468 million subscribed by CMP and a loan by CMP that in 8 years will be converted into a capital increase subscribed by CMA CGM. The transaction, which is subject to antitrust and other regulatory approvals, is expected to close in Spring 2020.
USD 93 million (of which USD 85 million immediately and USD 8 million in a four-year earn‑out) from the sale of a 50% stake in a logistics hub in India, which will be completed in the first quarter of 2020.
Lastly, an additional USD 100 million from stepping up CEVA Logistics’ receivables securitisation programme. The company has already locked in the renewal of its initial USD 450 million securitisation programme in Europe, the United States and Australia, which was scheduled to expire next spring.
About CMA CGM
Led by Rodolphe Saadé, the CMA CGM Group is a world leader in shipping and logistics.
Its 506 vessels serve more than 420 ports on five continents around the world and carried nearly 21 million TEUs (twenty-foot equivalent units) in 2018. With CEVA, a world leader in logistics services, CMA CGM handled more than 500,000 tons of airfreight and 1.9 million tons of inland freight in 2018.
CMA CGM is constantly innovating to offer customers new maritime, inland and logistics solutions.
Present on every continent and in 160 countries through its network of 755 offices and 750 warehouses, the Group employs 110,000 people worldwide, of which 2,400 in Marseille where its head office is located.