Thursday, March 7, 2013

European Freight Forwarding and Logistics Groups Publish Results

'We did not react fast enough' says Swiss Boss
Shipping News Feature

SWITZERLAND – FRANCE – A time for annual statistics from European based shipping and forwarding interests this month as Panalpina announced its full year results which show the Group’s gross profit decreased by 1% to CHF 1,465 million from CHF 1,477 million in 2011. The company explained that its gross profit was impacted by weak air freight and weak European imports, whilst its logistics and ocean freight divisions performed well. Higher costs and various non-recurring charges, including provisions of CHF 59.2 million for the EU and Swiss antitrust fines made in the first quarter in 2012, also affected the gross profit. CEO Monika Ribar said:

“Our 2012 results are unsatisfactory. We did not manage to compensate for the setback in air freight. In ocean freight and logistics we considerably expanded our business despite a slowing market growth, but it was simply not sufficient. On the cost side we did not react fast enough.”

The Group’s net forwarding revenue in 2012 increased by 2% to CHF 6,617 million, compared to CHF 6,500 million in 2011. Solid organic gross profit growth in logistics (+8% to CHF 378 million) and ocean freight (+5% to CHF 460 million) was overshadowed by a set-back in air freight where gross profit decreased by 9% to CHF 627 million in 2012. Accordingly, the contribution of air freight to Group gross profit decreased in 2012 while the share of ocean freight and logistics increased: In 2012, Panalpina generated 43% of its gross profit in air freight (down from 47% in 2011), 31% in ocean freight (down from 29% in 2011) and 26% in logistics (up from 24% in 2011).

In 2012, Panalpina transported 801,000 tons of air freight, 6% less than in 2011. The weight and size per shipment in air freight decreased substantially in 2012, particularly in Hi-tech and Telecom, but stabilised in the last quarter of 2012. As a result, Hi-tech and Telecom, where the company has a high exposure, accounted for 31% of Panalpina’s Air Freight tonnage in 2012, down from 36% in 2011.

The ocean freight division transported 1,388,000 TEUs in 2012, 6% more than in 2011 and a new record for the company. Gross profit per TEU of ocean freight remained practically stable at CHF 332 (-1%). In logistics, Panalpina introduced the software RedPrairie as a global standardised Logistics platform, established four Logistics Competence Centres and opened several new logistics centres bringing the total warehousing space under management to more than 1.2 million square metres.

Due to the weak air freight and higher cost base the underlying EBITDA fell to CHF 121 million (-43% from CHF 212 million in 2011). The underlying EBITDA-to-gross profit margin decreased to 8.3%, down from 14.4% in 2011. The higher cost base and various non-recurring charges led to a Group loss of CHF 70 million in 2012 (consolidated profit of CHF 127 million in 2011). Ribar continued:

“The market environment will remain difficult and volatile and we are therefore very cautious regarding forecasts for 2013. We will have to stay very vigilant so that we can take necessary actions fast. We have already introduced a number of important measures aimed at reducing costs and improving our operating margins. Given our high exposure to cyclical industries and the trend to lighter shipments in certain product categories, we are also critically reviewing our customer portfolio in air freight. In ocean freight, we will build on the positive development.”

Elsewhere, French road haulage and logistics group Norbert Dentressangle (ND) reported a financially sound 2012 group expansion boosting the figures following acquisitions, with a growth of 8.5% to €3,880 million from €3,576 million in 2011 in the Company’s consolidated turnover. The EBITA amounted to €142.3 million, up 9.1% compared to 2011, in line with turnover growth. The operating margin rose to 3.7% of turnover in 2012, and remained stable compared to 2011. In 2012, Net income, Group share, rose to €74.7 million, up 18% compared to 2011.

The Transport division showed a turnover of €2.04 billion and reported significant growth in operating profit (up 27.6% against 2011), which increased to €60.4 million. As a result, its operating margin increased from 2.5% in 2011 to 3.1% in 2012.

Logistics generated a turnover in excess of €1.78 billion, which was supported by encouraging results in the UK, Italy and the Netherlands, particularly in the last quarter. ND also strengthened its logistics position in Antwerp with the acquisition of Nova Natie’s logistics/freight forwarding activities. The division’s operating profit amounted to €77.9 million (down 3.2% against 2011) and its operating margin stood at 4.4% of turnover.

Freight forwarding further experienced major growth in 2012, with the acquisition of the John Keells Group’s freight forwarding activities in India/Sri Lanka, and turned in a turnover of €143 million in 2012, up from €86 million in 2011. Freight Forwarding’s operating income reaching €1 million compared to €0.3 million in 2011.

ND continued to internationalise its activities and currently generates 59% of its turnover outside France. The UK, which is the group’s second largest country in terms of turnover, now accounts for approximately 32% of total sales. In 2012, the company, strengthened its already sound financial structure and reduced its net financial debt by 22%, down from €624 million in 2011 to €489 million in 2012. Hervé Montjotin, CEO said:

“The Norbert Dentressangle teams turned in a solid financial performance in 2012. Despite a worsening and volatile economic environment, we continued to gain market share in our three divisions. Thanks to our flexibility, the stability of our organisation and tight management, our EBITA rose by 9%, in line with our growth in turnover. Our financial structure has been further strengthened and our activities have continued to grow through international expansion. As a result, we can build upon these key success elements to further execute our strategic plan, through both organic growth and targeted acquisitions.”