The two Swiss forwarders, Kuehne + Nagel and Panalpina have both announced their 2018 full year profits this week, something that offers the opportunity to compare and contrast the two companies that face such different futures.
Kuehne + Nagel delivered a workman like set of results for the year, yet parts of the company’s results did pose questions. Overall net turnover was up 11.7% at CHF20.7bn, gross profit rose 9.8% to CHF 7.7bn and EBIT (Earnings Before Interest and Tax) was up 5.8% at CHF987m. Pre-tax earnings were CHF995m, up 4%. These numbers suggests a narrowing of margins, quite possibly focussed on the core sea forwarding business. Seafreight Forwarding saw volumes measured in TEU (Twenty Foot Equivalent Unit) 7.7% higher at 4.7m, however K+N said that “margins in European exports were under considerable pressure” although “those in Asia-Europe trade were growing”, resulting in EBIT rising by just 1%. Things were better at Airfreight Forwarding, where volumes increased by 11% and EBIT jumped by 13.4%.
Business at Contract Logistics was also a little mixed, with net turnover up by 9% but EBIT falling heavily by 14.3% “due to the review of the project portfolio and investments for a new global warehouse management system, used for the operational control of the Group’s worldwide fulfilment centres”. This suggests IT problems. The good news was the often troubled ‘Overland’ trucking business saw EBIT climb by 55.1% to CHF76m.
The situation at Panalpina is somewhat more sensitive. Therefore, a rise in gross profit by 7.3% year-on-year to CHF1,500m and in EBIT 15% higher at CHF118.4m was welcome. Consolidated profit was CHF75.7m for 2018, up from CHF57.5m in 2017.
Drilling-down into the performance of the different businesses, Air Freight, which is Panalpina’s largest operation, saw volumes in terms of tonnage carried up by 4%. However, EBIT was down slightly at CHF 108.2m from CHF 110.3m in 2017. The performance of Ocean Freight was the reverse of Air Freight. Here although volumes fell by 2%, Gross-profit-per-TEU rose by 7% and EBIT was positive at CHF1.8m, in contrast to the loss seen in 2017. The ‘Logistics’ business saw an increase in gross profit of 3% and a new high for EBIT at 11.9%.
One of the things that jumps out from the two sets of results is the strength of K+N’s performance in air freight, whilst it seemed to stumble in sea freight. In contrast Panalpina seemed not to deliver in air freight, whilst the traditionally weaker sea freight forwarding recovered. Neither of these results change the strategic position of the two companies, leaving no room for complacency in the face of stronger competitors.
Source: Transport Intelligence, February 28, 2019
Author: Thomas Cullen
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