K+N delivers in exceptional market

Kuehne+Nagel

The phrase ‘strong results’ is becoming overused in the logistics sector at present. Any of the improvements in profits have to be judged in the context of extraordinary market conditions, yet in such a context Kuehne and Nagel’s results for the Financial Year 2021 still look impressive. Turnover (revenue) is up 61% to CHF32.8bn (US$35.59), gross profit up 32% which reflects the leap in the price of transport, EBIT (Earnings Before Interest and Tax) up 175.3% at CHF2.946bn and total earnings for the year up 173.1% at CHF2.1bn. These numbers were flattered by currency fluctuations but not overly so.

Sea freight forwarding, or what Kuehne and Nagel now calls ‘Sea Logistics’, has always been Kuehne and Nagel’s strength and 2021 was no exception. The ‘Gross Profit per Tonne’ metric went through the roof with gross profit itself leaping by 94% whilst EBIT rose by 262% to CHF1.529bn.

The air freight business matched this performance. Gross profit was up 92% year-on-year at CHF2.55bn and EBIT was CHF1.167bn, up 131%. For the fourth quarter EBIT was up 237% year-on-year, with profit per kilo doubling.

Both of these core freight forwarding businesses are obviously benefitting from the exceptional market conditions, yet the annual rises in profit, which is the number that counts, does show that Kuehne and Nagel has been agile in exploiting its opportunities. The company in part attributes this to its technology such as its ‘Seaexplorer’ freight forwarding platform.

Other parts of Kuehne and Nagel’s business also did well. Slightly surprisingly the ‘Road Logistics’ business saw net turnover jump by 15% year-on-year and profits in terms of EBIT by 52% to CHF 94m. This in part must reflect the congestion and high prices seen in the earlier quarters of 2021, however Kuehne and Nagel ascribe the result in great-part to the e-commerce boom. Whatever the explanation, for a business that has often struggled this is an impressive performance.

The experience of the contract logistics business was more complex the other divisions. Kuehne and Nagel has a lot of exposure to automotive business and this must have suffered badly over 2021, however whilst net turnover did fall by 6%, possibly influenced by the crisis in the automotive supply chain, EBIT leapt 95% to CHF156m. Kuehne and Nagel ascribe this to demand for pharmaceuticals and e-commerce logistics as well as “automation”. It is presumably the case that the depression in one sector was offset by the boom in the others.

Kuehne and Nagel has demonstrated over the past year that despite the competition from strong rivals such as DSV and DPDHL they are capable of delivering performances that are amongst the best in the sector. Whilst some companies will suffer as market conditions deteriorate Kuehne and Nagel is likely to sustain its relative position.

Source: Transport Intelligence, 3rd March 2022

Author: Thomas Cullen

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