Logwin’s first quarter sends mixed signals to the market


The first-quarter results of Logwin told a familiar story – trading conditions remain tough in the logistics industry, particularly for smaller players, with pricing continuing to come under pressure.

The Luxembourg-based 3PL, which has a market cap of €290m, said that the economic environment had not changed since the end of 2015, when it reported a mildly positive performance. It’s finding it more difficult to create value, and that is reflected in its one-year stock performance of +6.5%, which compares with a +78.7% surge since May 2014, following the company’s comprehensive corporate restructuring.

The company described the logistics sector as “still characterised by challenging market conditions in the first quarter”, with reported revenue plunging 10.4% to almost €246m. The air and ocean unit reported quarterly revenues of €151m, down 12.2% year-on-year due to extremely low freight rates.

Meanwhile, Logwin’s solutions business saw revenues fall 6% to €95.6m, impacted by “challenging market conditions as well as (…) structural measures”, implemented in 2015, including divestments.

Logwin said 2016 will be a year of transition. Nonetheless, at operating level the group met expectations during the first quarter thanks to lower sales, general and administrative (SG&A) costs and rising gross profits. These benefits “compensated partially for the decline in reported EBITA in the first quarter”, it noted, although on a comparable basis its core air and ocean division beat its level of quarterly reported EBITA, most likely due to positive sea volumes trends, in our view.

However, first-quarter net income and net cash flows were lower than in 2015, with the latter being affected by negative working capital changes.

Logwin has proved to be good at managing working capital in the past year, and that – along with extraordinary corporate activity – will be a very important value driver for shareholders, especially in the light of its manageable capital requirements.

As far as its capital deployment strategy is concerned, the group recently announced it has decided to entertain share repurchases, which signals a certain degree of confidence in its corporate strategy.

“Compared to the disclosures in the annual financial report 2015, the risk situation of the Logwin Group has not changed significantly in the first quarter of 2016,” the company noted, although currency tailwinds may turn into headwinds if its reporting currency continues to strengthen.

Logwin concluded that “no changes have occurred” regarding the opportunities and outlook highlighted in its 2015 annual report.

Source: Transport Intelligence, 4th May 2016

Author: Alessandro Pasetti