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Thursday, October 29, 2020

Maritime Logistics Professional

March 6, 2020

CMA CGM: Virus Impact Limited as China Activity Resumes

Photo: CMA CGM

Photo: CMA CGM

French shipping group CMA CGM said its operations in China were returning to normal after the coronavirus outbreak crippled traffic last month, forecasting the health emergency would have a limited impact on its results this year.

CMA CGM, the world's fourth-largest container shipping firm, expects to return to normal fleet capacity in China from mid-March after seeing signs of industrial production picking up as of late February, it said in a results statement on Friday.

The new coronavirus, which brought parts of China to a standstill before spreading around the world, has led container lines to re-route cargoes and reduce calls to Chinese ports.

Market leader Maersk warned last month that the outbreak would weigh on earnings this year while analysts have been warning of a sharp downturn in global growth, or even recession.

But CMA CGM anticipates that restocking by companies and freight rate increases announced by container lines will support a second-quarter rebound in shipping, Chief Financial Officer Michel Sirat told Reuters.

"We'll have to see if the longer term effects of the coronavirus could have a more structural impact. We don't think that's the case currently so we're confident for 2020," Sirat said by telephone.

The potential financial impact of the virus-related slowdown in China for CMA CGM was thought to be equivalent to 2-3% of 2019 core earnings of around $4 billion, Sirat said, suggesting an impact of around $100 million.

The group posted a net loss of $229 million for 2019, compared with a $34 million profit the previous year, citing the effects of an accounting rule change and the acquisition of loss-making Swiss firm CEVA Logistics.

Its shipping business increased its core operating margin to 5.8% from 4.9%, supported by $1.3 billion in cost savings, CMA CGM said.


(Reporting by Gus Trompiz, Editing by Richard Lough)

CEVA LogisticsCMA CGMGus Trompiz