Alphaliner: CMA CGM Debt Could Reach USD 15 Bn in 2019

After recording a total debt of USD 9.18 billion at the end of 2018, the French shipping major CMA CGM is expected to see its debt surge to USD 15 billion in 2019, according to data provided by Alphaliner.

Namely, the company’s new capital expenditure requirements and the consolidation of CEVA Logistics’ debt, as well as changes in accounting rules, would widen the debt.

During 2018, CMA CGM has made significant investments, including USD 506 million for new ships and other assets, USD 502 million for a 32.9% share in CEVA Logistics, and USD 210 million for the acquisition of the Finland-based regional carrier Containerships.

Alphaliner added that the group still has significant capital expenditure commitments in 2019, including some USD 670 million in payments for new ships, USD 140 million for vessel dry docking including scrubber installations, and a further USD 140 million for investments in terminals, depots and IT infrastructure. In addition, CMA CGM will also need to pay for the acquisition of the remaining shares in CEVA through a tender offer which is expected to be concluded in April 2019.

However, CMA CGM’s EBITDA earnings dropped significantly in 2018 to USD 1.15 billion, compared to USD 2.11 billion in 2017, while net earnings fell to only USD 34 million from USD 697 million a year ago. The deterioration in earnings and operating margins has prompted CMA CGM to announce a new USD 1.2 billion cost savings program.

CMA CGM also confirmed that its lease liabilities will increase by some USD 6.2 billion to USD 6.8 billion in 2019 as a result of the new IFRS 16 accounting rules.