CMA CGM posts $268m loss in Q3

However, the French ocean carrier said it has fully repaid a loan used to acquire Neptune Orient Lines and its APL container shipping subsidiary.    French ocean carrier CMA CGM reported a loss of $268 million for the third quarter of 2016 compared to profits of $51 million for last year’s third quarter.
   Had it not acquired Neptune Orient Lines (NOL) and its APL container shipping subsidiary earlier this year, CMA CGM said its third quarter loss would have totaled $202 million.
   CMA CGM said its revenues for the third quarter of 2016 reached $4.47 billion, up from $3.98 billion for the third quarter of 2015. However, $1.14 billion of its revenues for the third quarter of this year resulted from the contribution of NOL/APL.
   The company had negative earnings before interest and taxes (EBIT) of $86 million for the third quarter of this year compared with a positive EBIT of $158 million for the same 2015 period. Without the NOL/APL contribution, the EBIT for the third quarter of this year would have stood at a loss of $42 million.
   The company carried 4.5 million TEUs in the third quarter, compared with 3.3 million TEUs in the third quarter of 2015. A total of 1.3 million TEUs resulted from the NOL/APL acquisition, so excluding that effect, CMA CGM actually carried about 100,000 fewer containers with its pre NOL/APL fleet.
   “The slight contraction is attributable to the Group’s strategy of focusing on high contribution freight,” it explained.
   “In a market environment shaped by continued pressure on freight rates, average revenue per TEU, excluding NOL, was down 13.9 percent from third-quarter 2015 but up 3.8 percent on second-quarter 2016, bringing an end to a downward trend that had lasted for more than a year,” CMA CGM said.
   In reference to the outlook for container shipping, CMA CGM said, “Shipping companies have continued to take measures to adjust the deployed capacity hence resulting in a better alignment between effective capacity (net of scrapped vessels) and volumes carried. Freight rates have improved slightly but remain nonetheless at a historic lows. Against this backdrop, the Group will continue to focus on the integration of APL, additional cost savings and the quality of service provided to its customers.”
   Excluding NOL/APL, CMA CGM said its unit costs were down 9.7 percent “thanks to the combined impact of lower bunker prices and disciplined expense management.”
   The company said it is pushing ahead with a plan dubbed “Agility” that was launched on July 1 and aims to reduce costs by $1 billion by the end of 2017.
   CMA CGM said it has fully repaid a load used to acquire NOL/APL. It said it raised close to $580 million through the sale and lease-back of containers, $880 million through the sale and leaseback of 11 ships, and $260 million by securitizing receivables.
   The company said it is continuing to integrate CMA CGM with NOL, setting up 20 shipping alliances between CMA CGM and APL.
   It said the full reorganization of the APL and CMA CGM lines will be completed next April with the launch of the Ocean Alliance, a vessel sharing it is planning to enter into with COSCO, OOCL and Evergreen. Details on the new vessel sharing agreement were announced earlier this month.