The French CMA CGM Group – one of the largest container shipping groups in the world – said that its underlying profits fell by 82.5% in the fourth quarter of last year, at the end of a year that witnessed trade turmoil in the Red Sea and a decline in consumer demand.
The group was the biggest gainer in France in 2022, surpassing Total Energies for energy and LVMH for luxury goods, with annual net profits of $24.88 billion.
But the group said – yesterday, Friday – that its net profits fell to $3.64 billion last year.
The group’s chief financial officer, Ramon Fernandez, said that there is still a state of uncertainty over the current year’s expectations, adding that the expectations will depend on two factors: the macroeconomic and the geopolitical situation.
Factors also include a recovery in global merchandise trade from its lows in 2023, and support for shipping rates due to tension in the Red Sea.
The group, like other shipping companies, has been affected by the disturbances in the Red Sea since last October.
Trade rates between Asia and Europe declined as a result of attacks launched by the Houthi group on commercial ships in response to the war launched by Israel on Gaza.
The group said last Tuesday that its ship, “Jules Verne,” crossed the Red Sea under French navy guard, after it stopped the crossing of its ships earlier this February due to security risks.
The group announced a decline in its profits by approximately 73% over the entire year before deducting interest, taxes, “depreciation” (the decline in the value of fixed assets) and the amortization of debt, to $9 billion.
Last January, Rodolphe Saadeh, Chairman of the Board of Directors and CEO of the Group, expected that the Red Sea unrest would continue for “several months.”
The Houthi attacks are causing a sharp rise in the prices of shipping insurance contracts, with fees being imposed to cover risks associated with conflicts, in addition to the significant increase in the cost of shipping as a result of taking a longer alternative route.
According to the International Monetary Fund, maritime transport of containers through the Red Sea decreased by approximately 30% within one year.
Before the Israeli war, between 12% and 15% of global trade transited through the region, according to European Union figures.
