A solid performance in 2014: strong improvement in operating margin and net profit 2015: faster growth with the delivery of new vessels and the start-up of the Ocean Three strategic alliance

•  8.1% growth in volumes carried, largely outpacing the market 
• Financial flexibility further enhanced with a 21.5% reduction in adjusted net debt 
• 2015: driving faster growth thanks to Ocean Three and the new vessels entering service 

The Board of Directors of France’s CMA CGM, one of the leading global container shipping companies, met under the chairmanship of Jacques R. Saade, Chairman and Chief Executive Officer, to review the financial statements for the year ended 31 December 2014.

Operating and Financial Highlights

• In 2014, consolidated revenue rose by 5.3% year-on-year to $16.7 billion. 

Volumes carried increased by 8.1% to 12.2 million TEUs, largely outpacing the market and reaching a new historic high thanks to gains on the leading East-West lines and the strong sales performance by the Group’s regional and speciality brands.

In particular, volume growth was led by:

– The Asia-North Europe and Asia-North Africa trades, which enjoyed sustained growth.

– The reorganisation of CMA CGM and Delmas’ Africa lines, combined with the opening of new inland corridors and dry ports.

– The more vigorous US economy.

– The expansion of the ANL subsidiary, specialised in Asia-Pacific trades, which increased volumes carried on existing lines and opened new shipping services.

In addition, the Group’s e-business platform, opened in October 2013, handled an impressive 1.3 million TEUs in its first full year of operation.

• Core EBIT ended the year at $973 million, a 28.8% increase over 2013. The resulting core EBIT margin showed a substantial improvement, to 5.8% for 2014 and 7.9% for the fourth quarter, and thus once again ranked as one of the highest in the industry. 
• Consolidated net profit stood at $584 million for the year, a 43.2% increase from the $408 million reported in 2013, which included the gain from the disposal of the 49% stake in Terminal Link. In addition to the operating performance, this sharp increase was driven by a clear reduction in net finance costs, to $222 million from $445 million, including the $70 million positive impact of the euro-dollar exchange rate. 
• The operating performance also helped strengthen the Group’s balance sheet, which at year-end showed a strong cash position. Adjusted net debt amounted to $2.9 billion, down a steep 21.5%, and gearing stood at 0.55 at the year of 2014. 

Significant Events of the Year


A stronger balance sheet

• Improved credit rating: During the year, S&P raised CMA CGM’s credit rating to B+ with a stable outlook and Moody’s upgraded the outlook for the Group’s B2 rating to positive. 
• Further optimisation of the Group’s sources of financing: To enhance the Group’s financial flexibility, a new receivables securitisation program was negotiated, in a total amount of $880 million and with a maturity extended to 2017.
  Structural projects designed to drive faster growth 
• Signing of the Ocean Three Alliance: In September 2014, a strategic partnership was formed with CSCL (China’s second largest container shipping company) and UASC covering the Asia-Europe/Mediterranean and Transpacific trades. It encompasses 139 vessels, 15 shipping services and 175 weekly stopovers in 87 ports. Following receipt of the necessary authorisations, the agreement was implemented in early 2015. It enables the Group to offer quality service, deploy the right size ships and continue to optimise its unit costs. 
• Ongoing fleet adjustments: In line with its strategy of continuously improving the efficiency of its fleet, the Group took delivery of its first 9400-class vessels, suitable for the expanded Panama Canal as well as the Bosporus Strait, and equipped with a larger number of reefer plugs. The Group also modified the shape of ten bow bulbs in its owned fleet, thereby further improving bunker fuel efficiency and reducing its carbon footprint. Lastly, in 2014, the Group announced that it had placed an order for three 2,500-TEU ice-class vessels for delivery in 2016. 

Sustained deployment of the shipping growth strategy

• Extending the agency network with the opening of new offices, particularly in Botswana, Angola, Somalia, Mauritania, Chad, Algeria, Albania, Belarus, Russia, Thailand, Myanmar and the Philippines. At year-end, the Group had 655 agencies around the world. 
• Upgrading the shipping lines, notably in Africa, so as to increase the number of port stopovers while reducing transit times and related costs. 
• Increasing the reefer fleet: More than 7,000 reefer containers were delivered in 2014, increasing the fleet to more than 105,000 units to serve a segment that is growing faster than the rest of the market. 
• Enhanced intra-European coverage: Subject to the competition authorities, the acquisition of OPDR announced last November will strengthen the position of CMA CGM and its MacAndrews subsidiary by broadening their network to the Canary Islands and Northern Europe in 2015. 

Expanding the portfolio of shipping-related solutions

• Stepping up expansion in the Logistics Division: CMA CGM Log has extended its sales network with the opening of six new offices. This organic expansion will continue in 2015 with new offices in the Middle East and Latin America. 
• Opening new container depots (in Algeria, Cameroon, South Africa, Australia etc.) designed to support the integration of our maritime shipping services into higher value-added multimodal solutions. 
• Terminal agreements: Several partnerships have been formed to support the growth in the Group’s line business, in particular with the acquisition of equity stakes in Lekki, Nigeria and Mundra, India. In addition, CMA CGM is planning to create a hub in the Indian Ocean, on Reunion Island. It also pursued bilateral negotiations with the Jamaican authorities for the development of a terminal in Kingston. 

Outlook for 2015

In 2015, the container shipping market should continue to expand by around 5% in volume, led by sustained growth in the US economy and the improving outlook in Europe, albeit with a certain amount of geopolitical uncertainty.

The CMA CGM fleet will be strengthened by the delivery of six new 18,000-TEU vessels (of which three owned), twelve 9,400-TEU class vessels under long-term charter and three Group-owned 2,100-TEU GuyanaMax vessels.

These units will support growth in volumes carried, prepare the fleet for the broadening of the Panama Canal and help to improve operating performance, while lowering unit costs whereas freight rates will remain under pressure.

The Group is currently finalising the order of 3 additional newbuilt 20,600 TEU vessels to be delivered in 2017.
In 2015, the Group will also benefit from the deployment of its Ocean Three strategic alliance with CSCL and UASC, as well as from its agreements with Hamburg Sud in South and North America and the consolidation of OPDR (subject to regulatory approval).

The Group will pursue its commitment to innovation, in order to:

• Make its vessels more energy efficient. 
• Increase the value-added of its customer services by leveraging its investment in the TRAXENS start-up. 
• Add new functions to its e-business platform. 
• Develop technological innovations in refrigerated transport. 

In addition, the Group will continue to upgrade its information systems so as to continuously improve its operating performance.

In 2015, subject to freight rate variations, the recent decline in bunker prices may have a positive impact on operating results for the year.

In addition to its investments in the vessel and container fleets, CMA CGM will continue to expand its port terminals, dry ports and logistical operations.

M. Rodolphe SAADE, CMA CGM Group Vice-Chairman said: “CMA CGM’s performance in 2014 was extremely robust. By combining operational excellence, disciplined financial management and innovation, we have delivered strong growth in results with one of the industry’s highest margins and an even healthier balance sheet. We have entered 2015 with a fresh commitment to growth and are going to drive faster momentum by continuing to demonstrate our agility, with the launch of the Ocean Three strategic alliance, new solutions and new ports of call, and the strengthening of our positions in shipping-related businesses, such as logistical services, inland transport and port terminals.”