French container line giant CMA CGM reported a “sustained implementation of the CEVA Logistics’ turnaround plan” for the freight forwarding group that it acquired for an estimated $1.6bn earlier this year.
Announcing a “solid operating performance” for the group as a whole in 2019, Marseille-based CMA CGM confirmed that, in line with the CEVA Logistics acquisition financing plan, the group has “lightened its capital structure by divesting and refinancing certain of its assets”.
These transactions should enable the group to raise more than $2bn in cash by mid-2020.
CMA CGM said: “CEVA Logistics’ integration is proceeding according to the strategic plan.
“The new Marseille-based operations centre is enabling the Group to leverage the disciplined management of its logistics operations and generate revenue synergies with the signing of several new contracts.
“However, CEVA Logistics’ exposure to the automotive and technologies industries is continuing to dampen demand in both the Freight and the Contract Logistics services segments.
“In addition, the significant investments made to transform CEVA Logistics are also weighing on margins in the short term.”
CMA CGM added: “In its logistics business, the Group confirms the profitability targets previously announced for CEVA Logistics but sets their effects to 2023/2024 due to the challenging environment in certain industrial sectors.
“The group remains firmly committed to returning CEVA Logistics to a sustainable and structural profitability, thanks to the wide variety of measures and investments undertaken since the acquisition closed.”
In the first nine months of 2019 ended September 30, CEVA Logistics reported unaudited condensed consolidated total revenues of $5.2bn, down from $5.4bn in the like period 2018, and a pre-tax loss of $82m in 2019 versus a loss of $173m last year.
In the third quarter of 2019, the revenue was $1.7bn, versus $1.8bn in 2018, with a pre-tax loss of $28m versus a loss of $75m in same prior year period.