CMA CGM Group confronts falling profits amid Red Sea trade turmoil
Date
2/25/2024 3:34:45 AM
(MENAFN) The French shipping giant, CMA CGM Group, renowned globally for its container shipping operations, reported a significant 82.5 percent drop in underlying profits during the final quarter of last year. This decline comes at the end of a tumultuous year marked by trade disruptions in the Red Sea region and a decrease in consumer demand. Despite its stellar performance in 2022, surpassing industry giants like Total Energies and LVMH in net profits, the group's fortunes took a hit in 2023, with net profits dwindling to USD3.64 billion.
Ramon Fernandez, the group's CFO, highlighted the prevailing uncertainty surrounding this year's prospects, citing macroeconomic and geopolitical factors as key determinants. The outlook hinges on a potential recovery in global trade volumes from their nadir in 2023 and the impact of ongoing tensions in the Red Sea region on shipping rates. CMA CGM, alongside other maritime entities, grappled with disruptions in the Red Sea since October, leading to decreased trade volumes between Asia and Europe. These disruptions stemmed from attacks by the Yemeni Houthi group on commercial vessels in response to Israel's actions against the Hamas movement.
In response to heightened security risks, the group took proactive measures, with its vessel, the "Jules Verne," recently navigating the Red Sea under the protection of the French Navy. This decision followed a temporary halt in ship crossings earlier in February. As the situation continues to evolve, CMA CGM remains vigilant, navigating through turbulent waters while striving to adapt to dynamic geopolitical and economic conditions.
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