Dafei Group: Net profit in the first quarter soared by 4,229%

On June 4, CMA Group announced its results for the first quarter of 2021.Among them, the company's total revenue in the period was up 49.2 per cent year on year;Net profit jumped 4,229 per cent from a year earlier to $2.078bn.Under the strong results, CMA expects the demand for shipping of consumer goods to continue to increase since last summer, and this trend will continue through the second half of 2021.In the current environment, the group's second-quarter performance will be at least as good as that of the first quarter.

Q1 net profit to achieve a year-on-year increase, Q2 is expected to continue

The company reported revenue of $10.072 billion, up 49.2% year on year.Earnings before interest, tax, depreciation and amortization (EBITDA) were $3.185 billion, up 227.2 percent year on year;EBITDA increased 16.2 percentage points to 29.7%;The Group's net profit increased to US $2.078 billion from US $48 million in the same period last year, an increase of 4229% over the same period last year.Net debt decreased by $1.2 billion to $15.7 billion from December 31, 2020.

In terms of annual results, CAFI Group achieved a net profit of US $1.755 billion in 2020.

Commenting on the first quarter results, Rudolf Saad, Chief Executive Officer of CAFI Group, said that in a time of severe stress in the global supply chain, the complementarity of the Group's shipping services and the logistics service solutions provided by Kewar Logistics is particularly important.He further predicted that the demand for transportation of consumer goods will continue throughout the year.

In the shipping sector, revenue increased 57.4% year on year to $8.59 billion, and EBITDA increased 273.1% to $2.975 billion.EBITDA increased 19.4 percentage points to 34.6%.

It is worth mentioning that CAFI completed 5.5 million TEUs in the first quarter, up 10.7% year on year, thanks to strong demand.Revenue per TEU was $1,574, a significant increase from $1,120 in the same period last year.

In the logistics sector, Jihua Logistics realized revenue of $2.14 billion in the first quarter, a year-on-year increase of 25%;Earnings before interest, taxes, depreciation and amortization of $172 million, an increase of 25.5% over the same period last year;EBITDA was flat at 8 per cent.

CAFI said it would continue to increase investment in shipping and logistics assets to strengthen its financial structure.CAFI said in its financial statement that it had ordered 22 new container ships by April 2021, including six 13,000TEU container ships, six 15,000TEU container ships and 10 5,000TEU container ships.The first two are LNG-powered, while the 5,000TEU container ship will be powered by ultra-low sulfur fuel.The ships will be delivered between 2023 and 2024.

In addition, CMA announced that it will deploy six new 15,000 Teulng-powered ships on the China-US West Coast route by the end of 2022, with the first ship to be added in October 2021.On the container side, CMA said the group added 330,000TEU containers in the past year, an increase of 8.1%.

Looking ahead, CAFI Group expects the demand for transportation of consumer goods to continue to increase since last summer, and the trend will continue through the second half of 2021.In the current environment, the group's second-quarter performance will be at least as good as that of the first quarter.

Shipping costs skyrocketed during the slack season

The first quarter is usually a slow season for shipping, but this year it has been unusually buoyant.It is understood that in April, the Chinese government website published a message and a reply from the Ministry of Transport in response to the problem of "stranded shipping containers and soaring costs".

The response of the Ministry of Communications said that due to the overlay of multiple factors, the demand for international container transport has been released in a concentrated way since June 2020.Since the fourth quarter of 2020, ports in the United States, Europe and other places have experienced severe congestion, resulting in longer journey time, and the current on-time rate has dropped from more than 70 percent to about 20 percent.Many countries around the world, including Vietnam, India and South Korea, have also seen a rapid rise in freight rates, and the freight rates of some major routes have exceeded those of China.

According to shipping consultancy Drewry, global container cargo volume in the first quarter of 2021 grew nearly 9% year on year. The average value of China's export container freight composite index (CCFI) was 19,60.99 points, up 113.33% compared with the same period last year and 56.8% compared with the fourth quarter of last year.

The clogging of the Suez Canal caused a ripple effect on the global shipping market.Vespucci Maritime, a Danish freighter company, pointed out that after the Evergreen accident, it would take at least four to six months for global shipping to return to normal.

Meanwhile, the outbreak in Singapore, a shipping hub, has added to the strain on global shipping capacity.A Singapore-based seafarers' company said it used to have sporadic cases of infection on ships, but now it is common for novel coronavirus to spread rapidly throughout the ship, meaning the ships are no longer navigable.

'It's going to have an impact on shipping schedules, and it's going to have an impact on the supply chain,' said Ng Peiyuan, an associate professor at the National University of Singapore's School of Business. 'It's going to lead to higher prices for consumer goods because the whole shipping industry is disrupted.

Shipping costs have soared, and many companies have done well

With the exception of CMA Group, a number of shipping companies have recorded their highest performance ever due to limited supply of shipping containers and rising freight rates due to tightening demand.

On May 5th Maersk, the world's largest container shipping company, released its first-quarter 2021 results.The company had an exceptionally strong start to 2021, with higher earnings and growth across all business segments, including Shipping, Port Services and Logistics.

Earnings before interest, tax, depreciation and amortisation rose to $4bn from $1.5bn a year earlier, while earnings before interest and tax rose to $3.1bn from $552m, while revenues rose 30 per cent to $12.4bn, the data showed.

Without an improvement in current market conditions, Maersk expects supply chain bottlenecks and container shortages due to surging demand to continue through the fourth quarter of 2021 before returning to normal.

On April 29, shipping giant CCOSC (01919) disclosed a profit of extraordinary in the first quarter of 2021, and realized a net profit of 15.45 billion yuan in the first quarter of this year, a year-on-year increase of 5,200.62%.In other words, the company earned 170 million yuan a day on average in the first quarter.

In the first quarter of this year, the revenue of Asia-Europe (including Mediterranean) shipping line doubled in COSCO shipping line of the Group (COSCO and its affiliated companies), making a significant contribution to the soaring performance of COSCO.Data showed that the revenue of Asia-Europe, Asia-region and trans-Pacific routes reached 12.306 billion yuan, 9.661 billion yuan and 8.935 billion yuan respectively, with year-on-year growth of 136.93%, 69.18% and 75.70%.

On May 12th Herberot, a German shipping giant, announced its first-quarter results.In the first quarter, net profit surged to about $1.5 billion (1.2 billion euros), a 47-fold increase from 25 million euros in the same period last year.

During the reporting period, Heberot's operating income rose about 33 percent to about $4.9 billion (4.1 billion euros).Earnings before interest, tax, depreciation and amortization (EBITDA) were about $1.9 billion (€1.6 billion), a 267% increase over the same period last year.Earnings before interest and tax reached about $1.5 billion (1.3 billion euros), a 177 percent increase over the same period last year.Chief Executive Officer Rolf Habben Jansen said the company had benefited from strong demand in the consolidation market and higher spot rates at the start of the year.

The shipping industry is still preparing for another wave of price increases

In the short to medium term, several shipping groups will continue to raise rates due to the impact of the Suez Canal blockage and the outbreak in India on global supply chains.

According to the Platts Container Index, the cost of shipping a container from north Asia to the Nordic continent has soared to $12,000, up almost tenfold from $1,300 on the route a year ago.

Starting June 1, Heberot announced a combination of higher rates and surcharges for eastbound flights from East Asia to the United States and Canada, to $960 for a 20-foot container and $1,200 for a 40-foot container.

Wanhai said it would raise freight rates for Chinese exports to the rest of Asia because of recent increases in operating costs.According to the new rate, a 20-foot container will be charged $300.For a 40-foot container, up $600.

'European ports, terminals and warehouses are under significant operational pressure,' Maersk said in a statement.As a result, Maersk will impose congestion surcharges on all land carriers and intermodal carriers.Maersk expects a surge in global import and export demand to lead to supply chain bottlenecks, container shortages and other conditions through the fourth quarter of 2021.