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CMA CGM reports falling revenue and profits 07 March 2016

Volume growth helped stem decline in revenue

CMA CGM reported consolidated revenue down 6.4% year-on-year to US$15.7 billion in 2015. Volume growth helped stem this decline in revenue despite the sharp fall in freight rates. Core EBIT came in at US$911.0 million, down 6.4%. The resulting core EBIT margin remained stable, at 5.8% for the year, and was once again one of the highest in the industry. Unit costs fell as a result of the slump in oil prices and the Group's tight rein on other costs.

Volumes carried in 2015 rose by 6.3% year-on-year, to 13.0 million TEUs, significantly outperforming the market. In particular, volume growth was led by the new Ocean Three Alliance in place since January 2015 with China Shipping and UASC and CMA CGM's robust expansion in the US, where the Group had anticipated the market's growth.

2015 also saw the Company step up expansion in its Logistics Division with the acquisition of 60.0% of LCL Logistix, a 3rd party logistics leader in India's fast-growing market.

Looking ahead into 2016, the Company believes that growth in the container shipping market will continue to be dependent on global macroeconomic trends. The beginning of 2016 is tough and marked by freight rates under pressures which will impact industry profitability.

Against this backdrop, CMA CGM will pursue its ongoing efforts to adapt its operational organisation and optimise its lines. In addition, CMA CGM has announced that its flagship fleet of six 18,000-TEU vessels will be deployed in the Transpacific, the industry's fastest-growing market, starting at the end of May. This decision, which will help to speed the Company's growth and optimise its vessel fleet, follows on from the successful trial calls made in December and February to several US ports and the inauguration of the CMA CGM Benjamin Franklin at Long Beach.

In 2016, CMA CGM will also continue with its project to acquire Singapore-based NOL, the world's 12th-largest shipping company. The projected acquisition of NOL, which operates under the APL banner, aims to reinforce the Group's position in worldwide shipping with the complementary geographical strengths of the lines, while also boosting its competitive edge with substantial economies of scale. The acquisition, which is pending clearance from the various competent authorities, is progressing in line with the initially announced timeline.

Finally, the group will continue with the implementation of its cost reduction programme combining rigorous operational practices, optimal fleet utilisation, reduction of energy consumption, and strict control of all its spending.

Consequently, CMA CGM believes that it should continue to deliver above-market growth, leveraging its business model based on a global footprint, as well as its commercial dynamism and reactivity.