France’s CMA CGM, the world’s third-largest container shipping firm, said freight rates should recover next year after a market downturn led to a sharp fall in its third-quarter profits.
The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, hit a new all-time low on Friday, pulled down by a vessel glut and slowing industrial demand from China.
“Freight rates are expected to remain weak in the fourth quarter of 2015. The market should rebalance during 2016,” family-owned CMA CGM said in its third-quarter results statement on Friday.
The slide in freight prices has added pressure on a shipping sector grappling with overcapacity and CMA CGM, like container shipping market leader Maersk Line, has tried to use larger ships and consolidation to ride out the downturn.
Both companies are in preliminary discussions with Neptune Orient Lines Ltd (NOL) about a potential acquisition of the Singapore-based container liner, NOL said this month.
CMA CGM’s core earnings before interest and tax fell 36.5 percent from the third quarter of last year to $158 million, while consolidated net profit, group share, dropped by 74.8 percent to $51 million, it said.
Revenue was down 9 percent at $3.977 billion, with the company saying a 3.4 percent rise in volumes carried help limit the sales decline.
It did not give guidance for its full-year results but said it expected to “continue to outperform the industry average going forward.”
(Reporting by Gus Trompiz; Editing by Susan Fenton)