MD&A 31 st of December 2013 versus 31 st of December Operating revenue

Transcription

1 MD&A 31 st of December 2013 versus 31 st of December 2012 Operating revenue General: Consolidated operating revenue decreased by USD 21.7 million, or 0.1% from USD 15,923.2 million in 2012 to USD 15,901.5 million in 2013 primarily due to a 2.2% decrease in other activities revenues reflecting a.o. the deconsolidation of our subsidiary Terminal Link combined with a 0.03% increase in container shipping revenue. Other activities revenue decreased 2.2% or USD 25.5 million, from USD 1,175.1 million in 2012 to USD 1,149.7 million in 2013 primarily due to a reduction of the revenue generated in our intermodal subsidiaries by USD 17.3 million, the increase of the revenue in our agency network by USD 27.2 million and the decrease in revenue resulting from the sale of a 49.0% stake in Terminal Link for USD 38.2 million, as we accounted for our interest in Terminal Link under the equity method as from June 1, The container shipping operating revenue slightly increased by USD 3.8 million, or 0.03% from USD 14,748.1 million in 2012 to USD 14,751.9 million in Volumes increased 7.5% or thousand TEU, from 10,603.1 thousand TEU in 2012 to 11,396.7 thousand TEU in Average shipping revenue per TEU (calculated as shipping revenue divided by total carried TEU volumes) decreased 6.9% or USD 96 per TEU from USD 1,391 per TEU in 2012 to USD 1,294 per TEU in In 2013, we experienced significant volatility in freight rates, which resulted on average in lower freight rates during that period compared to The thousand TEU increase in volumes was mainly attributable to a thousand TEU, or 8.5% increase in volumes loaded on our main East West lines, out of which thousand relate to volume increases on our Asia / Europe (North Europe and Med) lines and thousand to volume increases on our lines calling the United States, to a thousand or 4.8% increase in volumes loaded on our main North South lines (including Delmas lines which was merged with CMA CGM in 2012) out of which 99.9 thousand TEU relate to our lines calling Africa, and to a thousand TEU increase in volumes loaded on our subsidiaries, most of the increase thereof being related to our subsidiary specialized on intra-asia Cheng Lie Navigation and to our Australian subsidiary Australian National Line. 1

2 Operating Expenses excluding depreciation: General: Consolidated operating expenses excluding depreciation increased USD million or 1.8% from USD 14,617.8 million (or 91.8% of operating revenue) in 2012 to USD 14,877.9 million (or 93.6% of operating revenue) in 2013, primarily due to a 8.0% decrease in bunkers and consumables, a 1.9% increase in chartering expenses and slot purchases, a 5.5% increase in handling and stevedoring, a 9.6% increase in transportation, a 7.1% increase in port and canal expenses, a 7.9% increase in logistic expenses, a 5.1% increase in employee benefits, a 2.4% decrease in general and administrative, a 1.8% decrease in addition to provision and allowances, exchange rate impact and other operating income and expenses. Bunkers and consumables: Bunkers and consumables decreased 8.0% or USD million from USD 3,845.1 million (or 24.1% of operating revenue) in 2012 to USD 3,537.9 million (or 22.2% of operating revenue) in This is mainly related to the decrease in our bunkering costs, including bunker swaps and settlement from USD 3,765.4 million in 2012 to USD 3,465.3 million in 2013, an 8.0% or USD 300 million decrease. This is explained by: a 1.1% or 61.5 thousand tons increase in our consumption of bunker fuel from 5,675.1 thousand tons in 2012 to 5,736.6 thousand tons in 2013, while carried TEU volume increased by 7.5% in the meantime. and to the decrease in average bunker rate from USD per ton in 2012 to USD per ton in 2013, a USD 59.4 per ton decrease (9.0% decrease). The later decrease was higher than the decrease seen market prices (Rotterdam fuel prices were down 6.3%) as a result of our efficient purchasing strategy. Stores and lubricating oil decreased USD 7 million or 8.8% from USD 79.7 million in 2012 to USD 72.6 million in Chartering Expenses and slot purchases: Chartering and slots purchases increased by USD 33.4 million or 1.9% from USD 1,747.8 million in 2012 to USD 1,781.1 million in Chartering and slots purchases account for 11.2% of operating revenue in 2013 (versus 11.0% in 2012). Chartering increased by USD 2.7 million from USD 1,510.4 million in 2012 to USD 1,513.2 million in 2013 mainly as a consequence of low charter rates despite a significant increase of the chartered fleet size which increased from 936 thousand slots in December 2012 to 1,020 thousand slots in December 2013 (a 9.0% increase). Chartering expenses include both a bareboat charter component and a running cost component (crews, maintenance such as lubricating oil and spare parts, insurance ). Running costs account for about 52% of chartering expenses in 2013 and are estimated at USD 6400/day per vessel on average for the chartered fleet (which ratio has been quite stable for the last 3 years). Slots purchase and other fixed expenses increased by USD 30.3 million or 12.8% decrease from USD million in 2012 to USD million in Handling and stevedoring: Handling and stevedoring increased by USD million or 5.5% from USD 3,401.9 million in 2012 to USD 3,588.2 million in 2013, mainly related to the increase in carried volumes (+7.5%). Handling and stevedoring expenses account for 22.6% of the operating revenue in Stevedoring of full containers increased 4.7% or USD million from USD 2,849.9 million in 2012 to USD 2,983.2 million in 2013 while stevedoring of empty containers increased 9.6% or USD 53.0 million from USD million in 2012 to USD million in

3 Transportation: Transportation increased by USD million or 9.6% from USD 1,533.8 million in 2012 to USD 1,681.7 million in Transportation expenses account for 11.3% of the operating revenue in This increase primarily results from a 9.6% or USD million increase in land transportation costs from USD 1,284.8 million in 2012 to USD 1,408.1 million in 2013 as our volume of carrier haulage increased, especially in the US, where the average cost is in average higher and to a lesser extent to a USD 24.7 million or 9.9% increase in third party feeders from USD million in 2012 to USD million in Port and Canal: A 7.1% or USD 73.5 million increase in port and canal expenses from USD 1,028.4 million in 2012 to USD 1,102.0 million in Port and canal expenses account for 6.9% of operating revenue in The increase is mainly due to a 12.9% or USD 79.6 million increase in port expenses from USD million in 2012 to USD million in 2013 while Canal costs decreased by 1.5% or USD 6.1 million from USD million in 2012 to USD million in 2013 due to currency impact and reduced number of passages. Logistic expenses: Logistic expenses increased by USD 90.3 million or 7.9% from USD 1,139.0 million in 2012 to USD 1,229.2 million in Logistic expenses account for 8.3% of operating revenue in This increase is related to: a 6.9% or USD 38.9 million increase in rental of containers and chassis, from USD million in 2012 to USD million in 2013, the fleet of rented containers having increased from 1,666.9 thousand TEU in December 2012 to 1,757.9 thousand TEU in December 2013, a 5.5% or 91.0 thousand TEU increase. a 24.3% or USD 24.2 million increase in containers maintenance and repairs from USD 99.9 million in 2012 to USD million in a 5.8% or USD 27.1 million increase in handling in depots, empty container transportation and storage, from USD million in 2012 to USD million in 2013 mainly as a consequence of increase in loaded volumes. Employee benefits: Employee benefits increased by USD 55.0 million or 5.1% from USD 1,088.8 million in 2012 to USD 1,143.8 million in Employee benefits account for 7.2% of operating revenue in Foreign exchange rate has a negative impact of USD 13.5 million over the period. The number of employees increased by 3.7% or 603 individuals from 16,239 to 16,842 reflecting on one hand the impact of the deconsolidation of Terminal Link and on the other hand the increase of Asia-Oceania based staff as we developed our shared service centers. 3

4 General and administrative: General and administrative decreased by USD 14.9 million or 2.4% from USD million in 2012 to USD million in General and administrative expenses account for 3.8% of operating revenue in General and administrative expenses consist of: Commissions which decreased by USD 20.2 million from USD million in 2012 to USD million in 2013, Fees which increased by USD 22.7 million from USD million in 2012 to USD million in 2013, Insurances which decreased by USD 15.6 million from USD 78.8 million in 2012 to USD 63.2 million in 2013, Other expenses decreased by USD 1.8 million from USD million in 2012 to USD million in Other expenses mainly consist of communication expenses, real estate rentals, bank expenses, taxes not related to income and fines and penalties. Additions to provisions and allowances, net of reversals: Addition to provisions and allowance, net of reversals decreased by USD 23.1 million from USD 50.8 million in 2012 to USD 27.8 million in 2013, mainly due to lower provisions in 2013 compared to 2012 to cover certain receivables whose payment was deemed doubtful in 2012 during a review of receivables at Delmas. Operating exchange gains / losses, net: Operating exchange gains / losses changed from a gain of USD 0.1 million in 2012 to a gain of USD 17.4 million in Other operating expenses: Other operating expenses increased by 22.2%, from $163.0 million in 2012 to $199.2 million in 2013, principally reflecting the write-off in 2012 of an account payable following renegotiation with one of our suppliers and the increase of vessels maintenance costs. Operating profit before gains on disposal of property and equipment and subsidiaries, depreciation & amortization, etc.: as a consequence of all preceding items, this line item decreased USD million or 21.6% from USD 1,305.5 million in 2012 to USD 1,023.6 million in Gains and losses on disposal of property and equipment and subsidiaries: Gains and losses on property and equipment and subsidiaries increased USD million from USD 18.9 million in 2012 to USD million in 2013, mainly as a consequence of the disposal of 49% of Terminal Link to China Merchant Holding (International) resulting in an accounting gain of USD million in 2013 as well as the disposal of containers in 2012 and 2013 resulting in a USD 21.4 and USD 35.7 million gain respectively. Depreciation & amortization of non-current assets: Depreciation and amortization of non-current assets decreased by USD 23.7 million from USD million in 2012 to USD million in This mainly includes: Subsidies (Net Present Value benefit related to assets), which increased by USD 41.5 million from USD 95.4 million in 2012 to USD million in 2013, due to 4

5 the increased number of vessels financed under this arrangement and certain anticipated purchase options. Depreciation of vessels, which increased 5.1% or USD 12.9 million from USD million in 2012 to USD million in 2013, mainly as the consequence of the delivery of one 16,000 TEU container vessel in December 2012 and two additional 16,000 TEU container vessels in April 2013, Depreciation of containers, which slightly increased USD 0.3 million from USD 54.1 million in 2012 to USD 54.4 million in Depreciation of intangible assets, handling equipment and real estate, which increased 4.7% or USD 4.6 million from USD 96.8 million in 2012 to USD million in 2013, mainly as a result of the acceleration of the amortization of the current ERP, which useful life was reassessed as a consequence of the strategic partnership with SAP aiming at developing a new information system, partly compensated by lower depreciation costs of terminal equipment as a consequence of the disposal of 49% of Terminal Link. Other income or expenses, net: Other operating income or expenses, net increased by USD 77.7 million from USD 45.4 million in 2012 to USD million in In 2013 this item includes the reversal of a provision relating to litigation over a vessel under construction for USD 12.0 million, a USD 43.8 million impairment on certain prepayments for vessels under construction following the renegotiation of this outstanding order dating back 2009, a USD 59.1 million impairment on terminals still controlled by CMA CGM as part of the reorganisation of our terminal operations and last, a USD 30.6 million adjustment of the provision related to the guarantee granted to CMHI upon the disposal of 49% of Terminal Link due to the circumstantial limitations to pay dividends in certain terminals and the delay in the ramp-up of others. Share of profit (or loss) of the associates and joint ventures: Share of profit (or loss) of the associates and joint ventures decreased by USD 20.3 million from USD 39.1 million in 2012 to USD 18.8 million in This mainly relates mainly to shares we hold on terminals (Terminal Link, CMA Terminals) and a few agencies. The decrease results in part from the reversal of a USD 10.0 million provision in relation to the Tangiers terminal in Besides, there was a lower performance in 2013 versus 2012 in our terminals. Operating profit As a result of the factors described above, operating profit decreased USD 40.2 million from USD 1,007.9 million in 2012 to USD million in With respect to our container shipping operating segment, revenue increased USD 3.1 million to USD 14,751.9 million and EBIT decreased by USD million to USD million in 2013, due mainly to a 7.5% increase in transport volume, a 7.3% decrease in average freight rate and a 5.3% decrease in unit cost per TEU. With respect to other activities, revenue decreased USD 25.4 million and EBIT slightly decreased USD 1.2 million, mainly due to the fact that the certain terminals were consolidated under equity method since the disposal of 49% of Terminal Link. Cost of net debt: Cost of net debt increased by 5.4% or USD 22.3 million from USD million in 2012 to USD million in 2013 as a result of: a USD 5.5 million increase in interest income from cash and cash equivalents from USD 10.3 million in 2012 to USD 15.8 million in 2013, due to our higher cash positions enabling higher investments in cash deposits; 5

6 a 3.1% or USD 11.0 million decrease in interest expenses on financial debt from USD million in 2012 to USD million in 2013 mainly as a result of the decrease of our financial debt over 2013; a USD 25.1 million increase in financial costs related to debt restructuring from USD 5.3 million in 2012 to USD 30.4 million in 2013 reflecting certain waiver fees and restructuring (which could not be amortized) incurred as a result of the agreement signed with our banks in February 2013; a USD 12.4 million decrease in interest rate and foreign currency financial derivatives from a cost of USD 48.3 million in 2012 to a cost of USD 35.8 million in 2013; a USD 26.1 million increase in foreign currency exchange gains and losses on financial debt from a loss of USD 12.4 million in 2012 to a loss of USD 38.5 million in 2013, as a consequence of the appreciation of the euro and translation effects on our euro-denominated debt. Other financial items: Other financial items decreased USD 50.8 million from a cost of USD 63.9 million in 2012 to a cost of USD 13.1 million in 2013 as a result of: a USD 13.4 million decrease in interest for deferred payments to shipyards from USD 17.7 million in 2012 to USD 4.4 million in 2013, as the two last vessels in our orderbook for which interests were due to the shipyard were delivered in April 2013; a USD 2.4 million change in fair value & settlement of derivative instruments that do not qualify to hedge accounting from a cost of USD 8.6 million in 2012 to a cost of USD 6.2 million in 2013; a USD 3.5 million change in fair value of securities from a gain of USD 3.8 million in 2012 to a gain of USD 0.3 million in 2013; a USD 2.9 million increase in the result from the disposal of securities from a loss of USD 2.0 million in 2012 to a gain of USD 0.9 million in 2013; a USD 24.1 million change in foreign currency on financial operations, from a loss of USD 23.1 million in 2012 to a gain of USD 1.0 million in 2013; a USD 11.5 million increase in other financial income and expenses, net from a cost of USD 16.2 million in 2012 to a cost of USD 4.7 million in 2013, mainly due to termination fees incurred in 2012 in order to early repay certain financing as part of the disposal of the related vessels. Income tax: Income tax increased by USD 36.2 million from USD 64.7 million in 2012 to USD million in Current tax increased by USD 9.6 million from USD 57.4 million in 2012 to USD 67.0 million in Various non-recurring items impacting our international activities amounting to USD 5.0 million are included in this current income tax expense increase. Deferred tax expense increased by USD 26.7 million from USD 7.2 million in 2012 to USD 33.9 million in 2013 The 2013 expense can be explained by the reduction of deferred tax assets for an amount of USD 19.5 million as a consequence of the reassessment of the business plan of the non-tonnage tax eligible activities and by the increased level of withholding taxes related to undistributed profits from subsidiaries by USD 14.0 million. 6

7 Profit for the period from continued operations: As a result of the factors described above, profit for the period from continuing operations decreased USD 38.9 million from a gain of USD million in 2012 to a gain of USD million in Discontinued operations: Discontinued operations amounted to nil in 2013 versus a loss of USD million in 2012 related to the disposal of Compagnie du Ponant. Profit for the period: As a consequence of all preceding items, profit for the period increased USD 69.9 million from a gain of USD million in 2012 to a profit of USD million in Minority interests: Minority interests decreased by USD 5.9 million from USD 28.6 million in 2012 to USD 22.7 million in 2013, mainly as a result of our strategy to recurrently purchase certain shares held by our minority partners. Profit for the period attributable to the owners of the parent: Profit for the period attributable to the owners of the parent increased USD 75.8 million from a gain of USD million in 2012 to a profit of USD million in