Wednesday, June 6, 2012

CMA CGM posts $248 mil net loss for Q1

France's container-shipping giant CMA CGM said its second quarter should improve from freight rate increases after posting a net loss of $248 million for its first quarter of 2012, while volume grew 13.4 percent year-on-year to 2.6 billion TEUs and consolidated revenue increased 2.6 percent to $3.6 billion.

Despite entering into operational agreements with Mediterranean Shipping Company in the Asia-Northern Europe tradelanes and Maersk on the Asia-Mediterranean market, the third-largest box carrier in the world said the first quarter "was particularly difficult for the maritime container shipping industry."

"In a market shaped by persistent overcapacity, freight rates fell to new lows during the period, while oil prices climbed sharply until mid-March, with Rotterdam bunker prices rising to nearly $720 per ton," the shipping line said in a statement.

Since the end of the first quarter, CMA CGM said, "the market has significantly rebounded with several successful freight rates increases."

The company pointed to an example in the Asia-North Europe trade where the benchmark Shanghai Containerized Freight Index was at $1,666 per-TEU as of June 1 compared to $490 per-TEU in December 2011.

The shipping group said it has also "observed" freight rate gains in the Asia-Mediterranean and trans-Pacific trades.
 
An over 20 percent decrease in heavy oil prices to $560 per-ton in Rotterdam at the beginning of June is another factor that has "sharply" improved the company's performance since the start of the second quarter generating breakeven level "in terms of operating profit in April.

A cost reduction will result in $400 million in savings by the end of this year that CMA CGM said should allow it to "return to the black in 2012."

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