CMA CGM expects activity in the shipping sector to bottom out during the second quarter as countries emerge from coronavirus-related lockdowns and ship operators adjust capacity, the France-based group's finance chief said.
The world's fourth-largest container shipping line had anticipated a 15% year-on-year drop in its volumes in the second quarter, after a 4.6% decline in the first quarter, Chief Financial Officer Michel Sirat said.
"I think that the second quarter will be the low point," he told Reuters by telephone. "The shipping industry is much more resilient than in the past."
The group expects an improved performance in the second quarter due to cost savings and capacity shifts that it said already helped increase its core operating margin during the previous quarter.
CMA CGM reported on Friday a first-quarter net profit of $48 million.
Excluding a $185 million gain from port terminal sales, the group extended losses from last year. But Sirat said a drag on net profit due to an accounting change for leases would ease after 2019-2020.
The group's adjusted earnings before interest, tax, depreciation and amortization rose 24.9% to $973 million, pushing up the adjusted EBITDA margin to 13.5% from 10.5% as group sales fell 3% to $7.19 billion.
Efficiency measures reduced CMA CGM's average costs per container by about 5% year-on-year in the first quarter, Sirat said.
For 2020 as a whole, Sirat estimated global container shipping volumes would fall by 5%, joining market leader Maersk in predicting a contraction in demand.
He said a 1 billion euro ($1.1 billion) loan taken out by CMA CGM and 70%-backed by a French state guarantee was a precaution during the coronavirus pandemic and the group was not planning extra measures like fresh asset sales.
The loan helped bring down sharply CMA CGM's bond yields that had soared in recent months, preventing it from renegotiating a bond due next January.
($1 = 0.8857 euros)
(Reporting by Gus Trompiz, editing by Louise Heavens)
