The return to normality in logistics markets continues to drive-down Kuehne+Nagel’s performance. The latest results for the Half-Year 2023 show that Net-Turnover fell by 38% year-on-year. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) were down 41% and final Earnings are down 47%.
The performance for the two forwarding businesses reflected weaker demand and weaker rates. For sea freight forwarding volumes handled by Kuehne+Nagel increased noticeably in the second quarter, however this was paralleled by a sharp decline in gross profit per container and profit per container. It is tempting to think the operator has ‘bought’ market-share. For the Sea Logistics business, sales were down 51% and Earnings Before Interest and Tax were down 47% for half-year year-on-year.
At the Airfreight Forwarding business the trend was similar, although volumes handled drifted downwards in line with the market. The only happy aspect to the market was that the rate of fall in terms of profit per kilo moderated somewhat. Overall sales for the first half of 2023 fell by 44% year-on-year and Earnings Before Interest and Tax fell by 65%.
In contrast, businesses outside of air and sea forwarding were quite robust. ‘Road Logistics’ may have seen a fall in sales of 8% in the first half, but high asset utilisation led to an increase in Earnings Before Interest and Tax of 16%. The Contract Logistics business did even better, with an increase in 36% in Earnings Before Interest and Tax on the back of sustained demand from pharmaceutical customers and, a little surprisingly, ecommerce. Both the road freight and contract logistics businesses seem focused on profitability more than sales growth.
At first glance results that see a near- halving of sales and profits are not positive. However, the fall in profits is the long unwinding of the extreme market conditions of the past three years. The question for Kuehne+Nagel is when the fall in profits will flatten-out and at what level. Kuehne+Nagel is still respectably profitable. The objective for the company is to keep it that way. So far it is not clear how it will achieve this.
Author: Thomas Cullen
Source: Ti Insights
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