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Shipping firm CMA CGM stays in red in Q3, pays back NOL takeover loan

Saturday, November 19, 2016 - 14:15

[PARIS] CMA CGM, the world's third-largest container shipping company, posted on Friday another net loss in the third quarter as freight rates remained weak and it integrated Singapore-based NOL, its biggest-ever acquisition.

The sector was showing the "first signs of stabilisation" as operators adjusted capacity but freight rates remained historically low, CMA CGM said on Friday.

The French-based company's net loss including NOL was US$268 million, compared with a US$51 million net profit in the third quarter of 2015. Excluding NOL, the net loss was US$202 million.

The shipping industry has been struggling with a prolonged downturn linked to vessel overcapacity and faltering economic growth, which contributed earlier this year to the collapse of South Korea's Hanjin Shipping Co Ltd.

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Denmark's AP Moller-Maersk reported earlier this month a third-quarter net loss for Maersk Line, the global leader in container shipping.

The tough environment has prompted consolidation moves in the industry, including CMA CGM's US$2.4 billion takeover of NOL that has given it market leadership on trans-Pacific routes.

CMA CGM, which is privately held by the Saade family, said it had completed on Friday the reimbursement of a US$1.6 billion loan taken out to finance the NOL deal, after raising US$880 million in a sale-and-leaseback transaction covering 11 ships.

The group had previously paid back half of the loan, supported by a sale-and-leaseback deal for containers and a securitisation programme covering customer debts.

Group sales were boosted by the integration of NOL as of June 14, with total third-quarter sales rising 33.9 per cent from a year ago to US$4.47 billion.

Shipped volumes were up 35.8 per cent including NOL, but fell 2.7 per cent on a like-for-like basis, with CMA CGM saying it had focused volumes on more profitable areas.


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