CMA CGM Hit By Freight Rates, Sees 2016 Recovery

reuters logo 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.

Credits: cma-cgm.com
Credits: cma-cgm.com

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)

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