Losses deepen at CEVA as one-time items hit profitability

CEVA Logistics reported another loss in 2018 as “various one-time items” took their toll on company financial performance.

The forwarder, which last year had box line CMA CGM become a strategic partner following an IPO, saw revenues for the year increase by 5.2% year on year to $7.4bn, earnings before interest, tax, depreciation and amortisation (ebitda) decreased to $198m and its net income stood at a loss of $242m, compared with a 2017 loss of $197m.

The company said its performance was affected by problems in its Italian contract logistics business and one-off costs of $56m for its IPO and refinancing.

Two contracts in Italy and the bankruptcy of a local Italian partner for temporary staff have resulted in “additional unplanned costs” of $42m.

The company also pointed out that the results also reflected its pre-IPO capital structure until August.

CEVA Logistics chief executive Xavier Urbain said: “CEVA finished the year with sound commercial performance in 2018.

“Margins have been impacted by one-time costs, in particular Contract Logistics in Italy. Looking ahead, we are confident in our ability to meet our enhanced medium-term targets with the support of our strategic partner CMA CGM.

“The organization is on track to accelerate its transformation and turnaround action plan in the next three years and beyond.

“Our expectations for 2021 are to exceed $9bn of revenue and reach an Adjusted ebitda of $470-490 m, which corresponds to an ebitda margin of 4.5 to 5%. A new chapter for CEVA is being written, together with our strategic partner.”

Looking at airfreight performance, the company saw air revenues increase by 8.3% year on year while volumes were down by 0.7% year on year as a result of the loss of certain customers due to “portfolio cleaning”. Airfreight rates across the industry increased rapidly last year.

The company has also looked to reduce its debts: “The IPO and subsequent deleveraging and improvement of the capital structure, has definitely changed customers’ perceptions as well as unlocked many new business opportunities,” it said.

“Significant new contracts and extensions were secured in 2018: In air and ocean freight, CEVA won contracts with technology and automotive customers, in contract logistics mostly with automotive, healthcare, e-commerce and consumer & retail clients.

“The partnership with CMA CGM started to deliver additional opportunities. Finally, CEVA is investing in its salesforce in order to accelerate sustainable growth in strategic geographies and segments.”