Monday, March 5, 2012

Freight Forwarding And Logistics Giant Financial Results Tell A Story

Currency Factors Have a Telling Effect on K + N Results
Shipping News Feature

SWITZERLAND – WORLDWIDE – In their financial results for 2011 published today international freight forwarding and logistics giants Kuehne + Nagel present a snapshot of the various industry sectors from ocean and airfreight through road and rail movements to contract logistics and, judging by the tone of its report, K+N seem happy with what was a difficult year for most, suggesting a 40% hike in share dividends to 3.85 Swiss francs (CHF). The strength of the Swiss franc however has a significant effect on the overall result.

Kuehne + Nagel make a point of insisting that gross profit is a better performance indicator than turnover and say that despite negative currency effects of 12.8 per cent, gross profit only decreased by 1.0 per cent compared to the previous year whilst acquisitions positively influenced gross profit by CHF 111 million. Turnover for the whole group was down to CHF 19,596 (20,261 in 2010) and net earnings up CHF 1million to CHF 606 million. The operational result (EBITDA) at CHF 978 million was 2.6 per cent below the previous year’s level (currency adjusted: increase of 9.6 per cent).

Over the various parts of the business 3PL activities worldwide started strong and fell off which the group says was due to cautious consumer and investment behaviour in the U.S.A. and in large parts of Europe, the interruption of supply chains following the disasters in Japan and the significant rise in commodity prices affected the logistics business. Small pockets globally however did show improvement with volume growth.

K+N’s ocean freight activities saw them handle over 3 million TEU for the first time volumes up 11% much of which they claim was due to increased LCL (less than container load)activities and the growth of their reefer business plus the majority share acquisition in a leading New Zealand player. Airfreight tonnage rose 13% accelerated by acquisitions in the perishables sector and was the only sector which saw a rise in EBITDA to gross profit margin (31.7% up 0.5%).

On the road and rail haulage side the acquisition in the UK af RH Freight plus takeover of the German Drude Logistik, Bad Hersfeld, which K+N say was of high strategic importance, lad to a jump in groupage traffic with invoiced turnover up 18.8% in local currencies however investment in the sector pulled operational results down over 2%. Contract logistics provided as usual results dependent on location with Germany and the Netherlands lauded as successful whilst France needed restructuring due to negative results. In North America, Kuehne + Nagel achieved a significantly improved result through restructuring measures, the closure of unprofitable sites and newly gained business. Speaking of the years results Karl Gernandt, Chairman of Kuehne + Nagel International AG, said:

“Considering the market and currency turbulences, the diverging economic developments and the devastating natural disasters, which influenced the business environment in 2011, we achieved very satisfactory annual results. The substantial volume increases and the future-oriented extension of our service portfolio in regions with large market potential mark an important milestone within our strategic growth programme and strengthened our global competitive position.

“Apart from investments in complementary acquisitions and selected growth areas, we maintained a high level of internal efficiency, as measured by the ratio between gross profit and EBIT. This underlines Kuehne + Nagel’s capabilities. The implementation of our global strategy in combination with a clear focus on profitability will again contribute to a positive development of the Group in 2012.”