French container shipping major CMA CGM has reported a net loss of USD 452 million for 2016, despite turning back to profit in the fourth quarter of the year amid increase in freight rates.
The company sank to red after reporting USD 567 million in 2015. However, CMA CGM seems to be on track of recovery as rates bounced back in Q4 pushing its net profit to USD 45 million for the quarter.
According to Rodolphe Saadé, CMA CGM Chief Executive Officer, 2016 has been a “landmark year” in the history of the company’s development, with the strategic acquisition of NOL and the creation of OCEAN ALLIANCE, “which will fully contribute to the group’s performance in 2017.”
Volumes shipped in 2016 by the CMA CGM group, including all its subsidiaries, rose to 15.6 million TEUs, 20% more than in the previous year due to the acquisition of NOL.
The average income per TEU increased by 2.9 % between third quarter and the fourth quarter 2016. In a difficult environment for the industry, the average income per TEU, on a comparable basis shrank 13.6 % in 2016 compared to 2015.
Accordingly, the CMA CGM group posted revenues of USD 16.0 billion, up 1.9 % on the year. In the fourth quarter, revenue rose 28 % compared to the same period in 2015.
In the second half, the group deployed its global operating efficiency plan named “Agility” that already led to a 5% reduction of average unit costs in 2016 from 2015, when excluding the effect of fuel price fluctuation. The company maintains its target to cut costs by 1 billion USD over the 18 months through December 2017.
“In 2017, the market is expected to continue its recovery. CMA CGM will pursue its strategy of development and innovation, in order to consistently offer its customers more high value-added services and thereby differentiating ourselves from the competition. In this context, the digital transformation that we are implementing within the Group will be a strategic tool to achieve this target,” Saadé added.
The company said that it doesn’t expect any new ship orders on a short-term basis in order to maintain the still delicate balance between supply and demand.
In addition, the group has postponed to 2018 the delivery of 3 vessels originally planned in 2017.