Kuehne + Nagel today reported another strong performance, with improved sea freight and air freight operating profits in the first nine months of this year, despite currency headwinds.

While net turnover and gross profit slightly decreased due to negative currency impacts, the operational result (EBITDA) improved by 4.6% to CHF 777 million compared with the previous year’s period. In spite of negative currency effects of 7.5%, the earnings for the period increased by 6.7% to CHF 512 million.

In its sea freight forwarding business, where it is the global number 1,
in the first nine months of the year Kuehne + Nagel (K+N) said it had exploited growth opportunities in the US import business from Europe and Asia, which compensated for the continuing market weakness in exports from Asia to Europe. Profitability improved “substantially” in this business unit: Although gross profit per TEU (revenues minus direct transport costs) increased by just 4.4%, in comparison to the previous year’s period, operating profit EBIT increased by 11.7% to CHF 335 million, causing the EBIT-to-gross-profit margin (conversion rate) to improve from 30.2% to 32.7%.

Meanwhile, despite a stagnating air freight market, Kuehne + Nagel grew its volumes by 5.1% in the first nine months of 2015. It said the increasing demand for specialised services in the industry segments automotive, pharma, aerospace, and perishables contributed to this favourable development, as did a good performance by the group in Asia, Europe and North America. In comparison to the previous year the conversion rate rose from 27.5% to 30.0%, as EBIT increased by 11.0% to CHF 202 million despite a gross profit increase of just 2%.

The group’s overland business reported a “stable” result. During the first nine months, net turnover declined by 12.1% due to the discontinuation of project business and lower rates as a result of lower diesel prices. But it said the acquisition of ReTrans, a US-based provider of multimodal transport management solutions, consolidated since August 2015, “will strengthen Kuehne + Nagel’s market position as an integrated logistics provider in North America”.

And in contract logistics, the  company said its capability to offer “scalable end-to-end solutions” in industries including automotive, high-tech, pharma and consumer goods led to numerous new contracts during the first nine months of 2015. However, the restructuring of selective projects in the United Kingdom, and currency effects, continued to impact the result negatively. EBIT decreased by CHF 21 million to CHF 86 million compared with the previous year’s period.

Detlef Trefzger, CEO of Kuehne + Nagel International, commented: “In the third quarter we further improved our results, especially in sea freight and air freight. The development in overland is solid and the optimisation of selective projects in contract logistics is proceeding as planned.

“Our strong focus on innovative logistics services and strict cost management enabled growth in profits in a demanding market environment. The performance in the first nine months confirms our market strategy and we see our group on the right track.”

Source: LloydsLoadingList