The latest full year results from CEVA show that its CEO, Xavier Urbain, has stabilised the company, pushing its freight forwarding profits higher whilst the company as whole claims a 22% increase in EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) after stripping-out the effects of the rising US dollar.
In the face of such adverse currency headwinds, CEVA saw revenue fall to US$6,972m from US7,864m in 2014 but EBITDA rose by 13% to US$233m. After exceptional items, which in CEVA’s case are usually linked to the cost of redundancy, EBITDA was $211m whilst operating income trebled to $71m. As has been the case previously however, the cost of CEVA’s debt burden pushed the company into a pre-tax loss of $179m which, nonetheless, represents an improvement over the $244m loss in 2014.
The Freight Management business saw revenue fall by 11.5% year-on-year to $3,318m, although CEVA assert that after the effects of currency fluctuations revenue was effectively flat. EBITA after exceptional items, however, improved by 241% in constant currency to $70m which might be viewed as a continuation of the recovery of this part of the business. Like a number of other forwarders, CEVA appears to have been focussing on improving margins through better productivity in what it describes as “investments in trade lane management”. Notably, CEVA reported air freight higher volumes although it said that ocean freight volumes had “underperformed the market”. It was however, able to exploit lower freight rates for to widen margins.
Contract Logistics revenue fell 13.5% to $3,641m but this was affected by the disposal of an Italian logistics business. Underlying revenue edged up 1.5%. However, weaker volumes are clearly affecting asset utilisation and this hit Adjusted EBITDA, which fell by 8.2% year-on-year to $202m. However, stripping-out currency affects CEVA assert that underlying profits were “stable”. CEVA says that its “pipeline” of contracts is still strong although the profit numbers suggest that the market is still tough.
The performance of CEVA has not been bad by the standards of the present market. Freight Management profits are hardly at the level of the best in the sector but at least it is heading in the right direction, whilst at 5.5% Contract Logistics is continuing to sustain some of the best margins amongst the big players. This has improved the pre-tax bottom line at CEVA, however the question is whether this is sufficient to deliver the impetus for the long awaited change of ownership that the company needs.
Source: Transport Intelligence, 7th March 2016
Author: Thomas Cullen