First quarter 2022 financial results: Stepping up strategic investments and excellent financial performance despite increase in operating expenses resulting from tensions in global supply chains

June 3, 2022

An investment strategy dedicated at supporting supply chains of our customers, against a backdrop of strong demand for transportation.

• Shipping: fleet to be reinforced with an order of 16 new-built-vessels, including 10 dual fuel LNG-powered and 6 dual fuel methanol-powered, bringing the order book to 69 vessels.

• Ports: development of the portfolio of port terminal assets.

• Logistics: major acquisitions to accelerate the strategic transformation into logistics.

• Air freight: strategic partnership with Air France-KLM combined with a developing fleet of 12 aircraft by 2026.

    - Increased investments supporting the eco-energy transition towards our Net Zero Carbon ambition for 2050.

    - Continued increase in revenue and EBITDA; further reduction in net debt.

The Board of Directors of the CMA CGM Group, a global player in sea, land, air and logistics solutions, met today under the chairmanship of Rodolphe Saade, Chairman and Chief Executive Officer, to review the financial statements for the first quarter of 2022.

Commenting on the results just released for first quarter 2022, Rodolphe Saade, Chairman and Chief Executive Officer of the CMA CGM Group, said:

"During the first quarter, our Group accelerated the deployment of its strategy to become a world leader in integrated logistics. We have also taken further steps in our energy transition by forging innovative partnerships to develop low-carbon fuels and by deciding to diversify the energy sources for our future vessels.

Due to strong demand, lack of available transport capacity and persistent port congestion, tensions in global supply chains are expected to continue. We remain mobilized to improve service quality and to meet the logistics challenges of our customers. We are also vigilant in the face of the risk of a deterioration in the global economic situation, linked to the pandemic, the rise in inflation and the war in Ukraine."

Stepping up investments to support our supply chains customers

The first quarter of 2022 continued to be impacted by COvid-19 pandemic, with a return to lockdowns in certain parts of the world, major tension on global supply chains and geopolitical tensions.

Against this backdrop, and to support the growth of the transport market in the years ahead, the Group has continued with its investments to strengthen its shipping, port, logistics and air freight network. These investments will allow CMA CGM to provide comprehensive solutions and improve the quality of service to its customers while stepping up its energy transition. With this ambitious investment program, the Group aims to strengthen its customers' supply chains to serve the global economy.

The current operating environment is affected by port and inland congestions, as well as scarcity of assets. This has resulted in a marked increase in operating expenses, in particular vessel chartering costs, additional port handling costs, and labor costs for logistics activities. Moreover, the recent deterioration of the geopolitical situation has triggered major energy price increases which have led to a 46% rise in bunker costs between the first quarter of 2021 and the first quarter of 2022.

Shipping: major expansion of the fleet with an order book of 69 vessels

• A new order of 16 vessels, including 10 dual fuel LNG-powered and 6 dual fuel methanol-powered, bringing the orderbook to 69 vessels.

• Three new 15,000 TEU (Twenty-foot Equivalent Unit) vessels and five new 15,000 TEU chartered vessels have been added to the Group's fleet during the first quarter of 2022.

• Acquisition of 26 second-hand vessels since January 1st, of which 14 during the first quarter of 2022.

• An additional 95,000 containers during the first quarter.

In 2017, CMA CGM chose to invest in dual-fuel vessels that currently run on Liquefied Natural Gas (LNG), to almost fully reduce atmospheric pollutant emissions. This represents the first step in reducing greenhouse gas emissions. The engine installed on these vessels is already compatible with BioLNG derived from biomethane (- 67% in CO2 emissions) or synthetic methane (including e-methane). In line with its decarbonization strategy, the Group is stepping up its investments and partnerships to introduce increasingly innovative solutions. The CMA CGM Group's "e-methane ready" fleet currently counts 29 vessels in service and will have a total of 77 by 2026.

To support the growth of its e-methane ready fleet, the Group is developing its LNG bunkering port infrastructures. In January 2022, CMA CGM completed the first ship-to-containership LNG bunkering operation in the Port of Marseille Fos, and in March 2022 in the Port of Shanghai. These operations are the result of the strong cooperation between the various players in the shipping and port industry.

Six new 15,000 TEU dual-fuel methanol-powered vessels will join the CMA CGM Group fleet by the end of 2025. This first order for methanol-powered vessels is in line with CMA CGM's strategy to expand its energy mix with the goal of achieving Net Zero Carbon by 2050. CMA CGM is thus accelerating its decarbonization trajectory by investing massively in gas and methanol fuels. The two sectors will be complementary for decarbonizing shipping industry in the years to come.

Image by CMA CGM  

The Group consolidated its position as a leading global port operator
The Group holds investments in more than 50 port terminals in 33 countries. CMA CGM's port operation strategy aims at supporting the growth in its shipping trade lanes and further improve the quality of service provided to its customers. In 2022, CMA CGM stepped up its investments in leading infrastructure.

• The CMA CGM Group closed its acquisition of a 90% stake in the Fenix Marine Services (FMS) terminal in Los Angeles. The Group previously owned 10% of the terminal before this transaction and is therefore now its sole owner.

• Following a call for tender process for the Port of Beirut's container terminal concession, CMA Terminals, a fully owned subsidiary of the CMA CGM Group, was retained to manage, operate and maintain the terminal for a period of ten years. Operations started in March 2022 with a target of 1.4 million TEUs and a USD 33 million investment plan to upgrade the terminal.

CMA CGM accelerates its strategic transformation to become a major global player in logistics
The CMA CGM Group has continued with its plan to develop end-to-end shipping and logistics solutions to support its customers' supply chains. Following the 2019 acquisition of CEVA Logistics, CMA CGM has stepped up its transformation with the finalization of three strategic acquisitions at the beginning of April 2022.

• Ingram Micro's Commerce & Lifecycle Services business activity provides comprehensive e-commerce logistics solutions (warehousing, inventory management, shipping and returns). The acquired business represents an estimated annual revenue of USD 1.7 billion in 2021 and employs 11,500 employees in 59 warehouses across the globe, with a strong presence in the United States and Europe.

• Colis Prive is a last-mile logistics player specialized in home parcel delivery and pick-up points in France, Belgium, Luxembourg and Morocco.

• GEFCO[1] is a European leader in contract logistics and a specialist in the automotive segment. With expertise in finished vehicle logistics, the company plays a key role in ensuring European automotive production lines continuity. GEFCO is present in 47 countries and employs around 11,500 persons worldwide, including more than 2,500 in France.

Air cargo: development of a complementary offering to meet diversified transport demand
In March 2021, the CMA CGM Group created CMA CGM Air Cargo, a new operating and commercial division specialized in air freight. CMA CGM Air Cargo offers solutions which complement the shipping and logistics expertise. A French airline with a fleet of 12 cargo aircraft in the long term

The Group has decided to make CMA CGM AIR CARGO a French freight airline and received its Air Carrier Certificate from the French Civil Aviation Authority (Direction Generale de l'Aviation Civile fran├žaise, DGAC) on June 1, 2022 following the delivery of its first Boeing 777F.

The Group is supporting the growth of CMA CGM Air Cargo investments in a fleet that will count 12 aircraft by 2026.
• Four Airbus A330-200F, currently in operation.
• Two Boeing 777F, one of which was delivered on May 31, 2022, and the second is in the process of being delivered.
• Two new Boeing 777F that have been ordered and are scheduled to enter the fleet in 2024.
• Four new Airbus A350F which will join the fleet between 2025 and 2026.

A major long-term strategic partnership with Air France-KLM
CMA CGM has signed a long-term strategic partnership in air cargo with Air France-KLM. This exclusive commercial partnership[2] will see both parties combine their cargo networks, their full freighter capacity and dedicated services in order to build an even more competitive offer thanks to the know-how and global footprint of Air France-KLM and CMA CGM.

Under this exclusive long-term partnership, CMA CGM will reinforce its commitment in the air freight industry by subscribing to the capital increase announced by Air France-KLM on May 24. CMA CGM will take a 9% stake in Air France-KLM's share capital for an amount of approximately EUR 400 million, thus becoming Air France-KLM's main private shareholder. Moreover, Air France-KLM's Shareholders' Meeting approved the appointment of Rodolphe Saade as a member of the Board of Directors.

Full report

CMA CGM press release