French shipping titan CMA CGM saw an 85.8% drop in profits in the second quarter of 2018, due to rising bunker fuel costs, low freight rates and global trade tensions.
The company’s Q2 profit was $22.7 million, compared to $213 million a year ago. Its fuel bill shot up by 40% to $852.5 million.
The company also made some big acquisitions in the second quarter, buying the Finnish business Containerships and a 25% stake in CEVA Logistics—though its attempts to pursue a merger with Hapag-Lloyd were not successful.
This follows a pattern of consolidation across the shipping industry, which has halved the top twelve operators over the last couple of years.
However, TEU volume was up by 9.7% year-on-year, leading to a revenue increase of 7.4%.
“Over the second quarter CMS CGM has recorded a core EBIT [Earnings Before Interest and Taxes] margin close to the first quarter as well as a positive net income in spite of a sharp increase in fuel prices,” said CEO Rudolphe Saade. “The strong volume growth demonstrates our commercial strength and the quality of our service offering.
“The acquisition of a 25% stake in CEVA is an important step in our strategy to complement our transport offering with logistics services. We are confident for the second half of the year. We anticipate an improved operating margin thanks to the rise in freight rates and sustained volumes.”