CMA CGM hit by overcapacity and oil prices

Monday, 18 June 2012 00:00 - - {{hitsCtrl.values.hits}}

Reuters: French family-owned shipper CMA CGM last week reported a first-quarter loss as overcapacity and sharply higher oil prices took their toll on the container shipping industry in the period.

But the company, the world’s third-largest container shipping firm, is predicting a sharp improvement in its activities in the second quarter and said it would return to profitability in 2012. Headquartered in Marseilles, southern France, CMA CGM said its performance has improved since the beginning of the second quarter and that it reached break even in operating profit in April as freight rates rebounded and oil prices began to ease.

A previously announced cost-reduction plan will continue, which should result in $400 million in savings by year-end, CMA-CGM said.

In the three months to March 31, the group reported a net loss of $248 million while sales rose 2.6 percent to $3.6 billion, reflecting a slump in freight rates and sharply higher oil prices until mid-March.

CMA CGM, which last year reported a loss of $30 million, has embarked in a wide-ranging cost-cutting plan and is in talks with its banks to overhaul its debt terms to erase the financial pressure created by the volatile freight sector.

Chief Financial Officer Michel Sirat told Reuters that an agreement is expected by the summer.