Rodolphe Saadé accelerates the transformation of the CMA CGM Group with a strategic move in logistics: Full year 2018 financial results

Upon the release of the 2018 financial results, Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, stated:

“In 2018, in a difficult environment, the Group posted a sharp rise in volumes and a record revenue of nearly USD 23.5 billion. Despite an increase in oil prices, our recurring EBIT margin remains considerably above the industry average.

We are pursuing our strategy of innovation and digital transformation in order to continue to offer excellent service to our customers and strengthen our performance.

In 2019, despite persisting geopolitical tensions, trade perspectives are positive. We will continue our development with the objective of improving profitability. That is why we are launching a new USD 1.2 billion cost reduction plan.

In addition, through the friendly public tender offer we are conducting on CEVA, our ambition is to become a world leader in both transport and logistics, thereby providing a complete and efficient service offer to our customers."

The Board of Directors of the CMA CGM Group, a worldwide leading shipping group, met under the chairmanship of Rodolphe Saadé, Chairman and CEO, to approve the 2018 annual consolidated financial statements.

A record revenue, driven by a continued increase in transported volumes

The 2018 annual revenue grew by 11.2%, to a record level of USD 23.48 billion. In the fourth quarter of 2018, revenue increased by 14.9% compared to the same quarter the prior year, reaching USD 6.3 billion.

In 2018, volumes carried by CMA CGM rose by 9.3% compared to 2017 and for the first time exceeded 20 million TEUs (Twenty-foot Equivalent Units) carried. This increase is attributable to the commercial dynamism of most of the shipping lines operated by the Group, in particular the Transpacific, India/Oceania and Africa lines.

The price of fuel rose steeply in 2018, an increase of 33%, strongly impacting our core EBIT.

Following an exceptional year in 2017, this core EBIT is USD 610 million, representing a core EBIT margin of 2.6%. In the fourth quarter, this margin reached 3.1%.

Excluding exceptional items on non-consolidated subsidiaries (GSL, CEVA), recurring net income was USD 150 million. The Group’s share of consolidated net income amounted to USD 34 million for the year 2018.

Major digital transformation of the Group to make CMA CGM a leader of shipping 4.0

The Group accelerated its digital transformation, a real differentiating force at the service of its customers, through the development of IoT and Artificial Intelligence, as well as partnership agreements related to blockchain. Some examples:

• Traxens by CMA CGM: commercialization of a smart container offering,
  Partnership with Shone:  use of Artificial Intelligence to support crews’ on-board decision-making,
• BuyCo: development of an electronic bill of lading secured by blockchain with the start-up BuyCo, in which the Group recently invested,
• Investments in other start-ups such as Nyshex, the first digital marketplace for sea freight contracts to propose space protection, and e-dray, a software platform designed to improve container handling operations in terminals,
• Freightos: CMA CGM is the first shipping company to be featured on this online freight platform.

In addition, the CMA CGM Group opened an incubator in Marseilles, ZEBOX, which already hosts 15 start-ups from around the world.

An innovation strategy at the service of our clients

The Group innovated in many areas to offer its customers a range of services that are more closely aligned with their needs and expectations. CMA CGM thus launched several innovations such as:

• Reeflex: a worldwide innovation for the transport of liquid materials by temperature-controlled containers,
• Climactive:  the most advanced solution to preserve freshness of fruit and vegetables all the way to destination.
   

Continued maritime development

In 2018, year of its fortieth anniversary, the Group continued its maritime development and the growth of its intra-regional network through:

• The launch of Ocean Alliance Day 2 Product, the largest operational alliance with a new unmatched service offer in which the Group deploys 122 ships on 41 lines,
• The acquisition of Containerships, a leader in intra-regional transport in Northern Europe. CMA CGM thus strengthens its strategy aimed at densifying its intra-regional network,
• The delivery of the first container ship powered by liquefied natural gas (LNG) which joined the Group’s fleet through its subsidiary Containerships, attesting to the leading role of the CMA CGM Group in the industry’s energy transition.

Launch of a new cost reduction plan of USD 1.2 billion

For 2019, the Group announces the implementation of a global plan to improve its operational performance with a cost savings objective of USD 1.2 billion through the optimization of lines and brands, and by further streamlining its processes.

Public tender offer on CEVA Logistics: CMA CGM becomes a world leader in transport and logistics

The Group initiated a major strategic partnership with CEVA Logistics, an important decision made by Rodolphe Saadé as part of the overall strategy of the CMA CGM Group.

On the occasion of CEVA’s initial public offering (IPO) in May 2018, CMA CGM acquired an equity stake of 24.99%, which was brought to 33% in October. CMA CGM also entered into derivative contracts between October 2018 and January 2019, enabling it to increase its economic exposure to more than 50% of CEVA’s capital.

In early 2019, CMA CGM launched a friendly Public Tender Offer on CEVA to develop a logistics offer complementary to the transport offer, allowing the Group to provide its customers end-to-end solutions.

This tender offer is part of the new strategic plan for CEVA, which has been developed jointly with CMA CGM. It includes:

• complementarity of activities by proposing CEVA solutions to CMA CGM customers, and vice-versa. The Group will henceforth be able to offer a complete range of logistics services covering the entire logistics chain, from production logistics to last-mile delivery, and including air, sea and land transport services as well as warehousing services,
• integration of CMA CGM’s freight forwarding activity into CEVA to increase CEVA’s footprint in ocean freight forwarding and to allow economies of scale. The activities of these two companies are indeed complementary, both geographically and in terms of products,
• cost reduction for CMA CGM and CEVA through pooled operations and cost synergies, such as cooperation for purchases and the implementation of shared services.

This move represents a major transformation that will make the CMA CGM Group a world leader in both transport and logistics, with 100,000 employees and more than USD 30 billion in revenue.