The world's third largest liner carrier CMA CGM said Monday it had first-half operating profits of $104 million, aided by a $392 million operating profit in the second quarter.
The line saw large increases in revenue and volume in the second quarter, while operating expenditure stayed relatively flat, Group Chief Financial Officer Michel Sirat said in a conference call with reporters Monday.
Revenue rose 12 percent year-on-year in the second quarter to $4.1 billion, while volume rose 8 percent to 2.7 million TEUs.
Net income for the first half was $49 million, and $288 million in the second quarter, not including exceptional items, like the disposal of non-core assets.
Sirat said average freight rates in the second quarter returned to first quarter 2011 levels, with the average freight rate $1,380 per TEU in the first half this year, compared to $1,400 per TEU in the first half of 2011.
CMA CGM expects to be profitable this year, with Sirat projecting a strong third quarter and an uncertain fourth quarter. He said freight rates have been trending down, but the line has taken note of early capacity withdrawals planned next month, and will consider actions to manage supply and demand.
Sirat said CMA CGM is ahead of schedule this year with regards to cost cutting, with $294 million out of $400 million targeted for cost cuts achieved in the first half.
He also said the plans to dispose of non-core assets – notably 14 non-majority stakes in terminal operations – are progressing, with the company aiming to sell by the end of the year.
CMA CGM is also continuing discussions with its financial lenders, Sirat said.
The line is aiming to postpone partial payment of its revolving $500 million debt facility past the current February 2013 due date.
Additionally, it is in talks with banks to restructure its long-term debt so that covenants are tied to the company’s gearing ratio rather than EBITDA (earnings before interest, taxes, depreciation, and amortization) to decrease volatility. Gearing ratio compares a company’s assets to its borrowed funds.
CMA CGM’s total debt is around $5 billion, with $4 billion owed to banks.
The line currently has one of the smallest order books in the liner carrier industry, with an equivalent of less than 4 percent of its current fleet on order.
CMA CGM is privately held and thus not required to disclose financial results, but typically does so on a quarterly basis. - Eric Johnson