The financial results disclosed by the CMA CGM Group for the first quarter of this year (1Q24) reflect the impacts of geopolitical tensions, especially in the Red Sea area where shipping lines are facing operational complications in navigating the Suez Canal, thus forcing them to take longer routes in their transoceanic services.
“After the market conditions deteriorated in the fourth quarter of 2023, the first quarter of 2024 was marked by a resurgence in spot transportation rates, primarily due to disruptions in the Red Sea region. The resulting longer travel times through the Cape of Good Hope have affected available shipping capacity amid a rebound in demand,” according to the quarterly report of the French-origin logistics integrator.
For 1Q24, the group generated revenues of $11.834 billion, a 7% decrease compared to the same quarter last year. Likewise, EBITDA totaled $2.390 billion, representing a decline of 30.3%, while the EBITDA margin stood at 20.2%, down by 6.8 points.
Similarly, the net income for the quarter stood at $785 million, marking a 61% decrease compared to the same quarter of 2023.
These group results contrast with the annual increase of 11.7% in the transportation of 20-foot containers (TEU), which reached 5.6 million during 1Q24.
“The increase is due to higher-than-expected global merchandise trade and freight transportation demand, driven by a consumption rebound and inventory rebuilding following the lows of 2023,” according to CMA CGM.
Meanwhile, the consolidated revenues of CMA CGM’s maritime transportation operations division amounted to $7.9 billion during the quarter, an 11.4% year-on-year decrease. EBITDA amounted to $1.9 billion, down by 35.8% compared to the first quarter of 2023. The EBITDA margin was 24.8%, 9.4 points lower. Average revenues per TEU stood at $1,400, a 20.7% year-on-year decrease.
In its logistics division, revenues reached $3.887 billion in the first quarter of the year, just 0.6% above 1Q23. EBITDA stood at $361 million, a 6.9% increase compared to the first quarter of 2023.
During the first quarter, the group’s logistics activities were particularly driven by the consolidation of Bolloré Logistics as of February 29 and by the momentum of Contract Logistics, Finished Vehicle Logistics, and Land Transport, especially in Europe.
Additionally, revenues from other activities (port terminals, CMA CGM Air Cargo, media, etc.) increased by 45.4% to $600 million. EBITDA increased by 43.6% to $79 million, driven by the inclusion of Port Liberty in the consolidation scope and the recovery of terminal business volumes.
CMA CGM indicated that uncertainties in the macroeconomic and geopolitical environment could continue to cause fluctuations in the transportation and logistics market, affecting its fluidity and seasonality.
Moreover, it is expected that the commissioning of new constructions will continue to outpace forecasted demand, ultimately affecting the balance between supply and demand and, by extension, freight rates.
In this environment, it asserted that cost control, punctuality, and the level of service provided to its customers will be essential drivers of competitiveness and differentiation.
“In a context of industry normalization, our group has demonstrated its agility and resilience to adapt to the new market conditions. Our shipping division achieved solid performance, driven by restocking in China and the United States. As for our logistics business, the acquisition of Bolloré Logistics gives us the critical mass we need to better withstand cyclical changes. In 2024, a year that remains uncertain due to the crisis in the Red Sea, CMA CGM will continue to meet the needs of its customers as effectively as possible. We will stay the course with our strategic investments, whether in decarbonization or artificial intelligence,” according to Rodolphe Saadé, Chairman and CEO of the CMA CGM Group.
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