CMA CGM posts $128m net loss in Q2

The ocean carrier’s revenue declined to $3.5 billion ($3.3 billion excluding the contribution from NOL) from the $4.1 billion in the second quarter of 2015 as the persistent pressure on freight rates drove down average revenue per TEU.    Marseilles, France-based ocean carrier CMA CGM Group reported a net loss of $128 million for the second quarter of 2016, compared to a net gain of $156 million for the second quarter of 2015.
   Excluding the contribution from Singapore’s Neptune Orient Lines (NOL), the parent company of container carrier APL, CMA CGM’s net loss stood at $109 million for the second quarter of this year.
   NOL’s contribution has been included in the consolidation scope since June 14, 2016. By June 30, CMA CGM’s total stake in NOL rose to nearly 93 percent. Since then, a compulsory acquisition process has been initiated, which will result in CMA CGM owning all of the company’s outstanding shares, resulting in NOL being delisted from the Main Board of the Singapore Exchange.
   CMA CGM’s revenue for the quarter totaled $3.5 billion ($3.3 billion excluding NOL), compared to $4.1 billion for the second quarter of 2015, as the persistent pressure on freight rates drove down average revenue per TEU.
   Meanwhile, the group said it kept a tight rein on costs during the quarter, helping to drive a 10.7 percent decline in unit costs thanks to the combined impact of lower bunker prices and disciplined expense management.
   “We are experiencing a market environment that remains difficult, with excessively low freight rates weighing on our revenue and margins,” CMA CGM Vice-Chairman Rodolphe Saadé said. “In an environment shaped by a lack of visibility, CMA CGM has the advantage of a strong liquidity position. The strategic relevance of NOL, fully financed, is reinforced. We are working to improve operating performance, notably via the launch of the Agility plan, which includes a program to reduce costs by $1 billion over the next 18 months, and in addition to the post-acquisition synergies with NOL.”
   On July 1, CMA CGM began operating the Kingston Container Terminal under a concession it won in 2015.
   Looking ahead, CMA CGM has established plans with COSCO, Evergreen Line and OOCL to launch the “Ocean Alliance” in April 2017 once the regulatory approvals have been granted. The companies signed a memorandum of understanding to form the new carrier agreement this past April. “Like the other CMA CGM subsidiaries, NOL will be part of the Ocean Alliance from the beginning,” CMA CGM said.
   As part of the NOL integration process, CMA CGM concluded that only two brands should be used on each trade. APL will serve as the core brand alongside CMA CGM on the transpacific, transatlantic and Asia-Gulf lines, while ANL will be repositioned on the Asia-Oceania trade.