CMA CGM's Third-quarter Profits Jump 522%

Another container-line quarterly report, another big profit and another bullish outlook on the rest of the year.

French carrier CMA CGM reported net income of $567 million for Q3 2020 for the group, up 522% from $45 million in Q3 2019.

For the shipping division, earnings before interest, tax, depreciation and amortization (EBITDA) was $1.5 billion, up 76% year-on-year. Volume rose 1%, to 5.59 million twenty-foot equivalent units (TEUs). Revenue per TEU was $1,120, up 5.2%.

"During the fourth quarter, maritime activity is more sustained than during the third quarter due to the ongoing increase in volumes," reported CMA CGM. "In this favorable environment and thanks to the ongoing control of unit costs, the group should see a further improvement in the EBITDA margin in the fourth quarter."

"The earnings upgrade cycle in container shipping continues," wrote Jefferies analyst David Kerstens on Monday. He pointed out that CMA CGM has "confirmed the positive outlook" previously voiced by Maersk and Hapag-Lloyd.

CMA CGM's bond pricing puts the scope of the recovery in context. The carrier's 6.5% coupon notes due in 2022 were trading as low as 55 cents on the dollar in March. They're currently trading at 95 cents.

Strong momentum in the Americas

According to CMA CGM, "Momentum is particularly marked in the U.S. and Latin America and allows the fleet to continue operating at full capacity, as during the third quarter. As a result, freight rates remain high."

Daily changes in container spot rates are tracked by the Freightos Baltic Daily Index. Average rates are substantially higher in October-November than in Q3 2020 for the main east-west trades: China-West Coast (SONAR: FBXD.CNAW), China-East Coast (SONAR: FBXD.CNAE) and China-North Europe (SONAR: FBXD.CNER). Likewise for the global index (SONAR: FBXD.GLBL).

Data from FreightWaves' SONAR platform on the number of U.S. maritime import customs filings (SONAR: CSTM.USA) also shows a stronger fourth quarter. Filings have been above 2019 levels since August.

CEVA bearing fruit

Meanwhile, CEVA Logistics – which CMA CGM acquired in early 2019 – "continues to recover and is on course with its transformation plan," said CMA CGM.

CEVA's revenues were $1.9 billion in Q3 2020, up 7.9% year-on-year. EBITDA was $167 million, up 18.4%. Click for more FreightWaves/American Shipper articles by Greg Miller 

MORE ON CONTAINER SHIPPING: Maersk Q3 profits surge and Q4 loooks even better: see story here. Container rates are on fire. How can you invest in that? See story here. Containers are the ‘new gold' amid ‘black swan' box squeeze: see story here.

CMA CGM Q3 2020 highlights: