SWITZERLAND – Today freight forwarding and logistics group Kuehne + Nagel officially published its annual report after what has been a turbulent fifteen months for the group with first quarter figures this year showing a slide in profits and the organisation still stinging from the smack delivered by the EU anti trust authorities last month when it received fines totalling over €53 million.
Only a year ago K+N was revealing it was to pay a 19.6% dividend increase over the previous year but news this year was far more muted. Turnover amounted to CHF 19,596 million representing a decrease of 3.3 per cent or CHF 665 million compared to the previous year. K+N says the ‘impact of the worldwide development of economic activity on the organic business’ resulted in an increase of CHF 1,428 million and acquisitions contributed CHF 459 million but the exchange rate fluctuation resulted in a negative impact of CHF 2,552 million.
Exchange rate fluctuations between 2010 and 2011, based on average yearly exchange rates, led to a significant lower valuation of the Euro of 10.9 per cent, a lower valuation of the U.S. dollar as well as depending currencies (e.g. a number of countries in Asia, South America and the Middle East) of 14.6 per cent and of the British Pound of 11.7 per cent against the Swiss franc. When comparing the turnover in the income statement, the company says a negative currency impact of approximately 12.6 per cent must be taken into consideration in 2011.
The Swiss group has announced how it intends to remedy the situation after seeing stock values dropping with an announcement that cost cutting measures already implemented should show through on the next quarter’s figures together with anticipated growth.
The problems over cartel activities simply don’t go away with a note in the annual report that K+N recognises provisions for an amount of CHF 161 million (2010: CHF 163 million) related to legal claims and other exposures in the freight forwarding and logistics operations. It points out of course that these figures are just a ‘best estimate’ as uncertainty surrounds the final outcome.
Some legal cases have been settled in the reporting period, and corresponding payments have been made with provision made in respect of a civil class action law suit relating to a competition investigation in the USA which itself was settled last November after a plea agreement. This left the way clear for shippers to pursue the guilty carriers for their losses; as the report states, ‘a detailed breakdown of the claim is not presented as it may seriously prejudice the position of the Group in the pending litigations.’