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CMA CGM has posted a 72 percent drop in net profit during the first half of 2011 in comparison with the corresponding period last year, as high oil prices pushed up fuel costs for the world’s third largest container shipping company.

Net profit during the first six months was US$237 million, representing a $612 million decrease on the $849 million net profit achieved in the first half of 2010.

Despite deploying cost-control initiatives, high oil prices pushed up CMA CGM's bunker costs by 36 percent over the first six months of this year.

Meanwhile, net revenue during the six-month period rose by $539 million, or 8.0 percent, to $7,309 million, up from $6,700 million the previous year. Highlighting the positive revenue results, CMA CGM said that the business had benefited from an increase in volumes carried and stable freight rates on most of the group’s lines.

In all, more than 4.8 million TEU were carried over the period - a 9.1 percent increase that CMA CGM said outperformed the market thanks to its 'modern, competitive and particularly efficient fleet'.

"These figures reflected the firm demand observed over the period in most of the markets where CMA CGM holds strong positions, with improved freight rates on the South American and Caribbean lines (up 5%), the Transatlantic lines (up 6%) and the Transpacific lines (up 11%) amply offsetting the Asia Europe and Mediterranean trades," CMA CGM said.

During the first half of 2011, CMA CGM sold an equity stake in the company by issuing $500 million in ORA equity notes to the Yildirim Group and raised an aggregate $945 million through two bond issues denominated in dollars and euros. This completed the plan to bolster the balance sheet, as approved at the beginning of the year. Also over the period, the group financed most of its 2011 and 2012 capital expenditure plan. As of 30 June 2011, the group had $1.7 billion in cash, before the early redemption of two bond issues in July, in a total amount of $550 million.

Outlook

CMA CGM said it will continue to develop its strategic positions in emerging markets, with a focus on Russia and India. In addition, it aims to pursue expansion in Latin America in order to benefit from the 2014 opening of the Panama Canal’s third set of locks. CMA CGM said its new hub, in Kingston, will be ideally located to capitalise on the new opportunities in the region.

Moreover, the group said it will pursue its programme to reduce costs in terminal operations, logistics processes and capital projects.

"CMA CGM Group believes that 2011 should be a positive year, barring any unforeseen events in today’s highly unstable global economy," the group said.

Commenting on the group's results and outlook for the future, Rodolphe Saadé, Executive Officer, said: “Our first-half performance was very satisfactory, both operationally and in regard to the strength of our balance sheet. We drove faster growth in freight volumes than the competition, while demonstrating the effectiveness of our strategy by raising nearly a billion dollars from leading international institutional investors.

"Although the current global economic situation calls for caution, we remain confident in our ability to further strengthen our positions thanks, in particular, to our modern, efficient fleet and the quality of our extremely professional teams, which enable us to take a calm view of both the medium and the long term.”