Resilient operating performance, very encouraging outlook for 2012 despite a loss in the first quarter
CMA CGM carried volume grew by 13.4% year-on-year to 2.6 million teus in the first quarter of 2012, while consolidated revenue increased by 2.6% to $3.6 billion during the period.
The first quarter was particularly difficult for the maritime container shipping industry. In a market shaped by persistent overcapacity, freight rates fell to new lows during the period, while oil prices climbed sharply until mid-March, with Rotterdam bunker prices rising to nearly $720 per ton.
In response to these challenging market conditions, CMA CGM continued to implement its cost reduction plan, which delivered $96.5 million in savings over the quarter, above initial target.
CMA CGM also successfully deployed the operational agreements in partnership with MSC on the Asia/Northern Europe trades and with Maersk on the Asia/Mediterranean lines.
Despite these efforts, CMA CGM reported an EBITDA of $ -31 million and a net loss of $248 million for first-quarter 2012, which nevertheless represents one of the best financial and operating performances in the container shipping industry for the period.
Strong improvement expected in the second quarter
Since the end of the first quarter, the market has significantly rebounded with several successful freight rates increases. On the Asia/North Europe trade, for example, the benchmark Shanghai Containerized Freight Index (SCFI) stood at $1,666/teu as of 1 June, a 3.4-fold increase from $490/teu in December 2011. Similar gains have been observed on the other leading trade routes, particularly the Asia/Mediterranean, Asia/USA and Asia/Latin America lines.
Over the same period, oil prices have decreased significantly, with heavy fuel oil falling close to $560/ton in Rotterdam at the beginning of June, more than 20% below the March peak.
As a result, CMA CGM Group’s performance has improved sharply since the beginning of the second quarter. In particular, the Group reached breakeven in terms of operating profit in April and will pursue its cost reduction plan, which will result in $400 million in savings by year-end. The Group also expects to return to the black in 2012.