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Oil prices puts pressure on CMA CGM's EBIT, but they stay positive

The high oil prices are affecting the finances of the large shipping companies. Just like other maritime transport companies, CMA CGM is experiencing the effect of high bunker prices. Yet, this French company booked a positive EBIT of $67 million for the second quarter of the financial year.

"Over the second quarter, CMA CGM reported a core EBIT margin close to the figure for the first quarter. They also noted a positive net income despite the sharp rise in bunker prices", reacted Rodolphe SaadĂ©, Chairman and CEO of the CMA CGM Group. "The strong growth in volume demonstrates our commercial power and the quality of our service."

source: CMA CGM

The shipping company says their income grew by 7.4% to EUR5.7 billion (2017 Q2: $5.31 billion). This growth in revenue is partly thanks to the 9.6% larger volumes that were shipped. With this, the volumes increased above average. This is due to the strengthened Transpacific and Asian/Gulf region routes within the Ocean Alliance. Transport to and from South America also increased.

However, their EBIT is under pressure. CMA CGM reported an EBIT of $67.1 million. This amount represents an EBIT margin of 1.2%. The high bunker prices, in particular, are reflected here. Over the past year, the petrol price rose by 27.7% per ton. The group is sticking to the cost-reducing measures they announced in the first quarter. These regulations consist mainly of the optimization of their container fleet and focusing on energy-efficiency. The company's consolidated net income ended up on $22.7 million. 

During the second quarter, CMA CGM took over the Finnish Containerships. This shipping company is a specialist in the intra-European market. This acquisition fits with CMA CGM's strategy to expand its intraregional services. A few years ago, they took over the South American company, Mercosur. Two new ships were also added to their fleet. Within their alliance, Ocean Alliance 41, new East-West lines were also set up (Asia-North America, Asia-Northern Europe, and Asia-Middle East). 

In May, the company acquired a 25% share in CEVA. The CEO called this participation in this logistics company, an "important step in our strategy to complement our transport business with logistic services". 

Rodolphe Saadé is looking toward the second half of the year with confidence. "We have confidence in the second half of the year", he concluded. "We anticipate an improved operational margin. This will be thanks to rising freight tariffs and the continued volumes."

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