CEVA notes declines in air and sea freight demand in Q3 2015 results

CEVA Logistics has reported its financial results for the third quarter of 2015. It recorded revenues of $1.69bn which represented a decline of 14.7% year-on-year. For the same period, the company reported adjusted EBITDA of $80m, which represented an improvement of 25% from Q3 2014. Consequently, margin stood at 4.71%.

The decline in CEVA’s overall revenue was largely attributable to currency fluctuations. On a constant currency basis, revenue would have been $1.9bn for the three months ended 30 September 2015, a decrease of 2.4%. This foreign exchange impact is mainly driven by the strengthening of the US dollar against the Euro. The rest of the decline in revenue was mainly due to a fall in volumes.

CEVA’s Freight Management division continued to deliver strong EBITDA performance in Q3, up 125% year-over-year in constant currency, although it was noted that global demand for freight transportation has declined due to headwinds from the air and ocean freight market. Consequently, air freight volumes declined 4% year-over-year and ocean freight volumes declined 5.7% year-on-year. 

Principally, the improvement in revenue was achieved as a result of an improved procurement setup. The result was also aided by CEVA’s focus on specific trade lanes and those where the company has a substantial existing presence, such as selected transpacific and Asia-Europe routes, allowed the company to gain market share. Air and ocean productivity gains were stated to have been achieved through CEVA’s focus on system enhancements, process improvements as well as cost control.

The adjusted EBITDA result included the proportional contribution of the Anji-CEVA joint-venture and excludes the impact of specific items which are significant non-recurring items such as restructuring and certain legal expenses. This flatters the EBITDA result with real EBITDA standing at $72m.

Freight Management’s business pipeline increased 13% over the previous year and CEVA during the period contracted two multi-year deals with major customers to offer Global 4PL Control Tower and Lead Logistics Provider solutions with an overall annual business value of some $80m.
Contract Logistics maintained adjusted EBITDA margins of 6.2% in Q3 2015, up from 5.5% in the previous quarter, driven by effective space management and improved productivity. Contract Logistics revenue remained flat like-for-like, year-over-year in constant currency.

The Contract Logistics segment’s revenue increased 5% year-over-year, progress was backed by significant developments in the consumer & retail and healthcare sectors. In the UK, CEVA signed four, ten-year warehousing and transport contracts for fashion retailers Coast, Karen Millen, Oasis and Warehouse which amount to over $40m annually.q