France based, global container shipping and logistics provider CMA CGM achieved strong earnings growth in Q1, led by its shipping business. EBITDA was up 29.1% y-o-y to $3,086m on revenues that improved by 12.1% to $13,261m.
CEO of the company Rudolphe Saadé said, “In an unstable geopolitical context marked by unprecedented trade tensions, the Group delivered solid performance in the first quarter, driven by the strength of our shipping activity and our long-term investments.”
Shipping – strong revenue and margin growth
Despite its acquisition spree in contract logistics in recent years, the core of CMA CGM’s income still comes from its container shipping business. Though more exposed to heavy geopolitical weather, it still contributes to much of the profitability of the Group. In the quarter, EBITDA grew 30.0% y-o-y to $2,531m on revenues that rose 11.5% to $8,758m.
Volumes of containers carried was up 4.2% y-o-y to 5.85m TEUs, signifying a higher average freight rate than in Q1, 2024. The company stated that this increase, “Can be attributed to sustained global trade and demand.”
Logistics – steady margins
With the uncertainties of the coming months, the exposure of the shipping business to the volatility of global trade is balanced by the relative steadiness, if lower margins, of the company’s Logistics business. This includes air and ocean forwarding, contract logistics and automotive logistics.
In the quarter, revenue for the segment was up 10.1% y-o-y to $4,280m and EBITDA was up 10.5% to $399m. Margin remained steady at 9.9%. CMA CGM’s most recent acquisition, French contract logistics giant Bolloré Logistics, was consolidated into the company around 15 months ago, contributing to the overall growth inorganically. However, the company stated, “Automotive market challenges hampered the business of the Finished Vehicle Logistics and Road Haulage businesses, particularly in Europe.”
Uncertainties dog global logistics
Saadé concluded, “While the outlook for the rest of the year remains uncertain, our direction is clear: control our costs, strengthen our positions in growth markets, and enhance our commercial agility to meet our customers’ expectations.”
The sudden announcement of the agreement between China and the US to cool their trade dispute is emblematic of the uncertainties that global scale multinational logistics companies face – from total trade war to talks in just a weekend leaves strategists with no idea what’s down the road. Ten days ago it looked as if transpacific trade lanes were about to dry up yet shipping lines are even now pilling on capacity to meet a surge in demand. As such, the stability of the Logistics business for CMA CGM is more important it seems than ever in terms of a steady earnings stream.
Author: Richard Shrubb
Source: Ti Insight
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