The latest half year results from Kuehne + Nagel (K+N) are impressive even by today’s standards. On a revenue that increased 55.4% to CHF20.6bn (US$21.34bn), the company made an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of CHF2.58bn (US$2.67bn), up 84.5% year-on-year and Earnings Before Tax leapt by 114.3% to CHF2.214bn (US$2.28bn).
The condition of the forwarding business continued to be dominated by the dysfunction of both the sea container and air freight markets, with congestion at ports and cancellation of air services in Russia and China or what Kuehne + Nagel called the “continuing tense situation in the major seaports – especially in Shanghai and in Europe” resulting in “planning and execution” continuing to be “complex”, creating a “high operational workload”. That said Kuehne + Nagel’s volumes in sea freight fell by 3.4%, although airfreight volumes were 15.8% higher.
All of this led to high profitability for Kuehne + Nagel, with Sea Freight Forwarding up 139.7% year-on-year and air freight forwarding 103.4% year-on-year. There are some tentative signs markets were beginning to soften towards the middle of the year.
Things at contract logistics were not quite so buoyant. Net turnover was up 7.1% year-on year for the half-year, whilst EBIT (Earnings Before Interest and Tax) was up 12.5%. K+N says that increased warehouse utilisation, business from the pharma sector and e-commerce drove the business.
‘Road Logistics’, which in the past has struggled, saw a performance comparable to forwarding. Net-turnover was up 12.4% year-on-year but EBIT increased 48.1% for the half-year. The reason was that “the networks were fully utilized in all regions” with “shipment volumes again significantly increased in the first half of 2022”.
This performance from K+N was obviously remarkable, but it might be asked how long it can be sustained. Dr. Detlef Trefzger, CEO of Kuehne + Nagel commented that “the uncertainties and obstacles in global supply chains continued in 2022. The Covid-related lockdowns in China, the invasion of Ukraine, the exceptionally strong increase in energy prices and high inflation resulted in an even more challenging business environment”. Yet it seems that this challenging business environment is exactly what enabled K+N to make EBITDA margins of 12.5%. Some of these problems are easing going into the third quarter of 2022, so results may possibly not be quite as extraordinary for K+N in the rest of the year.
Source: Transport Intelligence, 28th July 2022
Author: Thomas Cullen