SNCF Group has had a difficult few years and its subsidiary, Geodis, has been overshadowed by the acquisitions of what are now its much larger rivals. Yet the past year has represented an improvement. Although SNCF saw considerable disruption as a result of COVID-19, it has just published full-year results which show that revenue for the whole group was up 15% at €34.8bn and EBITDA (Earnings Before Interest, Depreciation and Amortisation) doubled, although cash-flow was still negative and net profit was €890m due only to sales of assets worth €1.1bn.
What drove SNCF Group’s performance was its logistics businesses, or as the company stated the “strong demand in logistics and freight helped cushion fallout from the health crisis and is set to drive future growth”.
SNCF’s key logistics asset, Geodis, saw revenue climb by a respectable 28% year-on-year to €10.9bn and EBITDA rise 33% to €948m. Unsurprisingly it was the freight forwarding business that, in the words of Geodis management, “benefited from a very positive market environment owing to a favourable price effect and increased volumes. Its revenue in 2021 stood at €4.9bn, +66% compared to 2019.” Much of this continued to be due to exceptional market conditions, or “extreme tension in the air and sea freight market” which resulted in Geodis entering long-term charters of both aircraft and container vessel capacity as well as leasing its own aircraft.
Geodis also said that its contract logistics business had prospered with “strong demand in the United States and in Europe”. Surprisingly to some, it commented that “activities linked to e-commerce now represent more than a quarter of sales in 2021, which illustrates GEODIS’ ability to adapt its offering to market expectations”. That said, the company continues to invest in conventional road freight.
Geodis was not the only part of SNCF Group to benefit from the unusual market. Even Fret SNCF, the freight business of SNCF has shown a profit, something which has been rare recently.
Certainly, these results from Geodis are respectable, although the company has not seen the doubling in profits, seen for example, by Expeditors. Geodis clearly views itself as a leading global logistics service provider but it needs to pedal hard to keep-up with giants of the sector, not just in-terms of its traditional businesses in forwarding and contract logistics but areas such a e-retail and the technology needed to deliver such solutions.
Source: Transport Intelligence, 1st March 2022
Author: Thomas Cullen
