CEVA turning the corner despite fall in revenue

CEVA is “turning the corner on volumes” despite a fall in revenue and profits over the past quarter. Revenue for the second quarter fell on a year-on-year basis by 4.2% to $1,978m whilst EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) before exceptional items fell by a third from $63m in Q2 2013 to $40m this quarter.

The contract logistics business was fairly stable despite seeing a fall in revenue of 9.5% with profits flat year-on-year $57m. Rubin McDougal, CEVA’s CFO commented to Transport Intelligence that this was the result of CEVA continuing to improve the quality of contracts and margins in this business. The picture in the key automotive sector was mixed with softer demand in the US, however the company expected demand for consumer technology to pick-up over the next couple of quarters.

Freight forwarding was a different picture. Here the freight management business saw revenues fall year-on-year 3.4% but ‘adjusted EBITDA’ was down from $23m over the same period last year to $3m. Rubin McDougal observed that although the first half of the year had seen continuing tough situation in terms of rates, volumes had begun to climb. Air freight volumes were up 1% but this had accelerated in recent weeks. Similarly volumes were up 7% over last year and were continuing to recover through June. McDougal said that this was likely to have an effect on rates in the near-term. However, he had not seen the sort of change in market structure reported by some forwarders recently, with continued fluctuations between pricing discipline and pricing breakdown.

As is so often the case with CEVA the company has been busy re-ordering its finances, establishing new credit facilities and paying down existing debt. CEVA has also outlined a number of legal cases that it is facing including some anti-trust issues, however McDougal observed that they were likely to be of limited importance.

Overall CEVA was up-beat about its near-term prospects with results improving compared to the previous quarter and a solid pipeline of contract logistics business at good margins. None the less it has to be observed that CEVA again slipped into the red by $54m this quarter.