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CMA CGM profit falls 87pc, chief dubs 2009 year of consolidation
2009/4/9
FRENCH shipping company CMA CGM, the world''s third largest, has posted net income of US$124 million, a decrease of almost 87 per cent from $966 million in 2007 as freight rates collapsed on all major trade lanes.
The group reported revenue of $15.1 billion, up 28.2 per cent compared with 2007. Freight volumes rose 15.6 per cent to 8.9 million TEU.
The group said it achieved these results on the back of new partnerships and slot swaps with comparable-sized shipping lines, launching new services in growing markets, expanding reefer presence, cargo projects and other niche markets, as well as through acquisitions of more productive ships and eco-friendly technologies.
CMA CGM''s container fleet in 2008 came to 1.76 million TEU, up 14 per cent. The reefer fleet rose sharply during the year, making CMA CGM the world''s second largest reefer carrier. The fleet totals 395 ships, of which 98 ships are owned.
Between 2009 and 2012, the group will take delivery of 52 new vessels, which are expected to generate economies of scale by replacing older ships.
"We have not cancelled any of our orders, but we are trying to defer some of our instalment [payments] to shipyards, or, if possible, postpone delivery," said CMA CGM founder chairman Jacques Saade.
Mr Saade said 97 per cent of the ships that CMA CGM has ordered have already been financed "before the current crisis."
"As far as we are concerned we do not have issues with ship financing since they have been financed a while ago," he said.
In response to a difficult 2009, the CMA CGM group said it is introducing cost-saving measures: the rationalisation of services in slower markets, consolidating lines and strengthening partnerships to maintain service quality while reducing costs.
With three-quarters of the fleet being chartered, CMA CGM said that in 2009 more than 180 ships will come out of charter and will either be returned to their owners or renewed or replaced at attractive contract rates, which is expected to lead to substantial savings.
In a commitment to revising its cost structures, the group is increasingly operating its ships at slower speeds to lower bunker consumption. CMA CGM is campaigning for lower transit rates in the Suez and Panama canals and will continue to reroute part of the fleet via the Cape of Good Hope. It has also begun renegotiating contracts with terminals and shipyards to reduce costs.
All these new measures, which will be deployed in 2009, will cut operating costs by $600 million, it said.
"Thanks to our forward-looking strategy, the flexibility of our systems and processes and our international expertise, we are quite confident in the ability of our company and our management team to successfully weather the current crisis," said Mr Saade.
"Trade between Asia and especially Europe and the United States will remain inescapable and will unavoidably return to growth; 2009 will be a period of consolidation in the shipping sector and the major players will emerge stronger in the end," he said.
CMA CGM also continued its strategy of investing in major terminals in 2008, such as Malta, Tianjin, Xiamen, Miami, Odessa and Latakia to secure its shipping operations over the long term and optimise productivity.
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2009/4/9