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            july 20, 2019

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CMA CGM takes near-full control of Ceva Logistics


French shipping line CMA CGM has taken near-full control of Swiss third-party logistics provider Ceva Logistics by installing chairman and CEO Rodolph Saade as Ceva's new chairman. Ceva's chief operating officer and deputy CEO Nicholas Sartini has been appointed its new chief executive.
The reshuffling of top management that comes into effect on June 1, coincides with Ceva reporting decreases in its first quarter results, reported New York's FreightWaves.
CMA CGM, which announced in February it would launch a US$1.65 billion tender offer for the two-thirds of Ceva's shares it didn't already own, now owns 98 per cent of Ceva's shares and voting rights. Ceva said that CGM will proceed with a "squeeze-out" procedure under which the remaining shareholders tender their shares for what is deemed to be fair cash compensation.
Mr Sartini will replace Xavier Urbain, who will become Mr Saade's executive advisor, Ceva said. Mr Urbain has held the CEO position at Ceva since 2014. In addition, four board members, including former chairman and CEO Marvin Schlanger, did not stand for re-election at the company's annual general meeting held in Switzerland.
The tie-up between the two companies dates back to April 2018, when Ceva filed a $1.3 billion initial public offering on the Swiss stock exchange and announced that CMA CGM would take a 25 per cent stake in Ceva and enter into a strategic operational partnership. CMA CGM, in an effort to diversify away from ocean shipping services, wants to integrate third-party logistics services to add value to its customer relationships.
Meawhile, Ceva reported that first quarter revenue rose, in constant currency, by 1.1 per cent year on year. Adjusting for currency fluctuations, revenue dropped 5.1 per cent year on year. Earnings before interest, taxes, depreciation and amortization (EBITDA) totalled $134 million, a fall of 28 per cent in constant currency and down 32 per cent adjusted for currency fluctuations.
Ceva said it performed in line with its first quarter targets despite a "challenging" global environment. It also affirmed its 2021 revenue target of $9 billion, reflecting five per cent annualised organic growth, and EBITDA to between $470 and $490 million from $380 million.
Ceva's freight management's results were hit hard by weakness in air freight volumes, which more than offset gains in ocean tonnage. Ocean yields were solid at $288 per TEU compared with $226 per TEU in the year-earlier quarter. Yields on air freight traffic, measured in net revenue per ton, rose 2.2 per cent year on year. The drop in air tonnage and a corresponding rise in yield marks what Ceva called a "more selective approach to new business."
Contract logistics was plagued by slight year-on-year revenue weakness and unfavourable currency impacts in markets like Australia, Brazil and Turkey. In particular, the unit continues to struggle in Italy due to contract disputes that have required the company to set aside tens of millions of dollars to resolve.

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