<\/p>\n
The world\u2019s fourth-largest container shipping firm said on Friday it expected to return to normal fleet capacity in China from mid-March. There had been signs of industrial production picking up since late February, it said.<\/p>\n
<\/p>\n
Market leader Maersk warned last month the outbreak would weigh on 2020 earnings and analysts have warned of a sharp downturn in global growth, or even recession.<\/p>\n
<\/p>\n
But\u00a0CMA\u00a0CGM\u2019s Chief Financial Officer Michel Sirat told Reuters that restocking by companies and freight rate increases announced by container lines will support a second-quarter rebound in shipping.<\/p>\n
<\/p>\n
\u201cWe\u2019ll have to see if the longer term effects of the coronavirus could have a more structural impact. We don\u2019t think that\u2019s the case currently so we\u2019re confident for 2020,\u201d Sirat said by telephone.<\/p>\n
<\/p>\n
The new coronavirus brought parts of China to a standstill before spreading around the world, leading container lines to re-route cargoes and reduce calls to Chinese ports.<\/p>\n
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The potential financial impact of the slowdown in China for\u00a0CMA\u00a0CGM\u00a0was thought to be equivalent to 2-3% of 2019 core earnings of around $4 billion, Sirat said, suggesting an impact of around $100 million.<\/p>\n
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The group posted a net loss of $229 million for 2019, compared with a $34 million profit the previous year, citing the effects of an accounting rule change and the acquisition of loss-making Swiss firm CEVA Logistics.<\/p>\n
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Its shipping business increased its core operating margin to 5.8% from 4.9%, supported by $1.3 billion in cost savings,\u00a0CMA\u00a0CGM\u00a0said.<\/p>\n
<\/p>\n
CMA\u00a0CGM\u00a0had not yet seen an impact on demand in Europe as the coronavirus spread, including in Italy, the hardest hit economy in the region, Sirat said.<\/p>\n
<\/p>\n
The group had been able to find sufficient containers despite disruption to routes from Asia, he added.<\/p>\n
<\/p>\n
CMA\u00a0CGM\u00a0said it had renewed $535 million in credit lines due to expire this year. They will now run to 2023.<\/p>\n
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The group had been shut out of the bond market like other high-yield borrowers due to market fears over the coronavirus, but expected the situation to be temporary, Sirat said.<\/p>\n
<\/p>\n
The group\u2019s adjusted net debt, which swelled to $17.8 billion at the end of 2019 from $7.7 billion a year earlier due to the accounting changes on leases and the integration of CEVA, was manageable and not affecting cash generation, he said. (Reporting by Gus Trompiz, Editing by Richard Lough, Kirsten Donovan)<\/p>\n
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