French container ship giant CMA CGM is predicting weaker results lie ahead as first-quarter earnings dropped sharply.
The company noted a continued normalisation of its markets after record results in 2021 and 2022.
Net profit fell sharply to $2bn from $7.1bn in the first three months of last year, with revenue down from $18.2bn to $12.7bn.
Chairman and chief executive Rodolphe Saade said: “After two exceptional years, our industry has entered a phase of normalisation due to the slowdown in global growth, inflation and a destocking phenomenon that is continuing in many parts of the world.
“Despite this deteriorated context, our first-quarter results are extremely solid,” he added.
Saade views the result as a fruit of the group’s investments, which have seen more than $30bn committed over the past two years.
This has allowed the company “to constantly broaden and strengthen our range of transport and logistics solutions for our customers”, he said.
The fourth quarter’s trends remained in play in the first three months of 2023, with challenging market conditions in the transport and logistics industry, the shipowner said.
Freight demand continued to slow, spurring a rapid normalisation of spot freight rates, it added.
Ebitda stood at $3.4bn, down 61% year-on-year.
Liquidity still on the up
Financial resources net of debt totalled $6.2bn as of 31 March, up $1.5bn in three months.
Shipped volumes dipped to 5.02m teu from 5.32m in the same period of 2022.
This was blamed on household consumption of goods in Europe and North America dropping sharply amid price inflation and a rebound in spending on services, especially tourism and leisure.
There were also inventory adjustments in these regions, weighing on imports, especially from Asia, and particularly in the retail and lifestyle sectors.
CMA CGM noted relatively brisk activity in regions such as Latin America and Africa, together with eased congestion, but these factors were insufficient to offset the decline on the main East-West routes.
Shipping operations contributed revenue of $8.9bn, down 40.3%, with Ebitda at $3bn, 64% less than the year before.
The average revenue per teu stood at $1,766, a reduction of 37% from the first quarter of last year.
Looking ahead, the group said macroeconomic and geopolitical uncertainty would continue, with tensions in the supply-demand balance as new capacity arrives to weigh on freight rates.
“In this environment, the first quarter is expected to be the best quarter of the year as the group’s financial results continue to return to normal,” the owner said.
“The group is confident in its ability to weather the cycle thanks to its combined transport and logistics strategy and its financial strength,” CMA CGM added.
