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CMA CGM transforming to adapt to changing market

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The CMA CGM Group has undertaken a number of strategic moves in recent months, including the acquisition of CEVA Logistics and regional short-sea players such as Mercosul and Containerships and the modernisation of its fleet.

To adapt to the changing market, the Group is now taking a new step in its transformation by consolidating its development and implementing an ambitious cost reduction programme.

Implementing the turnaround plan of CEVA Logistics

Following the friendly takeover bid for CEVA, the CMA CGM Group now holds 99.4 per cent of CEVA’s equity. The Group is resolutely committed to CEVA’s financial recovery, and has already taken major structural decisions paving the way for CEVA’s rapid return to profitability.

New governance

Mr Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, was elected Chairman of the Board of Directors of CEVA Logistics at the Annual General Shareholders Meeting held on April 29, 2019.

A new, stronger governance structure has been put in place. Mr Nicolas Sartini becomes Chief Executive Officer as of June 1, 2019, tasked with implementing CEVA’s turnaround plan and returning it to profitability.

Creation of an operations centre in Marseilles

A CEVA operations centre will be set up in Marseilles, bringing together CEVA’s management teams and support functions, for a total of 200 employees (new jobs and transfers).

Located near the Group’s head office, it will strengthen the operational management and control of CEVA, said a release.

Raising the performance improvement and cost control programme target to $ 1.5 billion Intensification of the cost reduction programme

In continuation of the “Agility” plan to improve overall operational performance, which was implemented in July 2016, the Group announced in March 2019 a strengthened plan with a savings target of $ 1.2 billion.

Since its launch, this plan has already achieved savings of $ 245 million, through the rationalisation of some of the Group’s lines, greater operational efficiency, lower logistics costs, new partnerships with its suppliers, and the implementation of innovative technical solutions on board its ships to reduce their energy consumption and carbon footprint.

Further initiatives will reduce the Group’s overheads and transport costs while reinforcing the actions already undertaken.

This enables the CMA CGM Group to raise its savings targets and increase its ambitious performance improvement and cost control programme to

$ 1.5 billion, mainly by streamlining its organisation and its maritime routes.

Rationalising the APL and ANL lines

The scope of these two major Group brands will evolve as of October 1, 2019, in order to strengthen the Group’s overall performance and efficiency:

H CMA CGM, the Group’s global brand, will be the only carrier in the Transatlantic, Asia-Europe, Asia-Mediterranean, Asia-Caribbean and Europe-India/Middle East markets

H APL will focus on the following markets: Transpacific, in which it plays a key role, Asia-Indian Subcontinent where it will be the Group’s only brand, Intra-Asia, with CNC, Asia-Oceania, and the US Flag services

H ANL will remain the lead brand for Oceania.

The new organisational set-up will allow the Group to simplify its offer, making it more legible to its customers, and benefit from the expertise of specialist companies from coherent regional groups, while reducing its costs.

First quarter activity and financial results

In the first quarter, volumes transported by CMA CGM rose by 4.4 per cent compared to the first quarter of 2018. The beginning of 2019 was marked by strong development in intra-regional routes.

Revenue per container increased slightly in the first quarter of 2019 compared to Q1 2018, particularly on the routes serving the United States and Africa.

First quarter revenue was up by nearly 37 per cent year-on-year, to $ 7.409 billion. Coming on top of the Group’s 5.5 per cent organic growth, the impact of integrating CEVA amounted to $ 1.7 billion.

A mixed operational performance

Adjusted EBITDA came to $ 779 million, of which $ 423 million corresponds to the impact of IFRS 16 accounting standard and $ 144 million to the contribution from CEVA. Excluding these two items, EBITDA remained broadly stable at $ 212 million, compared with $ 217 million for the first quarter of 2018. Over the quarter as a whole, the rise in costs was contained, in line with revenue growth per TEU. The Group intends to reinforce its cost reduction programme during the coming quarters.

Outlook

The CMA CGM Group will continue to closely monitor current geopolitical tensions and the evolution of oil prices, and their impact on the world economy.

With the strong measures adopted and the strategic investments made, the Group is set to proceed with its transformation, strengthen its performance, accelerate its profitable development for the years to come, keep adjusting its offering and propose to its customers a tailored end-to-end service that meets their expectations, the release emphasised.

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