Kuehne + Nagel has a banner quarter for air and sea volumes in Q1, though conversion rates fall

Kuehne + Nagel

Kuehne + Nagel has reported that its sea freight volume growth in Q1 2017 was more than double that of the market while air freight tonnage increased by 15.5%.

Headline revenues excluding customs duties and taxes (net turnover) were CHF4,299m, an increase of 7.2% year-on-year. Gross profit was up by 3.5% to CHF1,648m, while EBITDA was flat at CHF257m.

In its Seafreight division, K+N increased its volumes by 9% to over 1m TEUs, which it claimed was more than twice as fast the overall market. The company asserted that its market share improved in almost all trade lanes, but particularly transatlantic and transpacific trades, with its new customer information system, KN Login, described as a “decisive success factor for winning new business”. EBIT as a proportion of gross profit, the so-called conversion rate, fell from 30.7% in Q1 2016 to 27.6% in Q1 2017.

In Airfreight, K+N’s volumes reached 350,000 tonnes, up by 15.5% year-on-year. K+N estimated that market volume growth was approximately 7%. Stronger market demand coupled with “solution-oriented, industry-specific offerings” were the reasons provided for its own performance. Pharma, perishables and e-commerce volumes were particularly impressive. Export business from Europe and Asia were also strong points. As in Seafreight though, the conversation rate declined, from 31.1% to 29.9%.

As for the Overland division, net turnover increased by 5.0%, which K+N said was clearly above market growth. “Higher volumes in the groupage, full truckload and intermodal businesses and the increased demand for industry-specific solutions, particularly for the pharma and the expo & event sectors contributed to the positive development.”

In Contract Logistics, net turnover improved by 6.8% year-on-year. New business was won in e-commerce and pharma. The company noted that the acquisition of two specialised pharma logistics companies would generate additional growth in future. EBIT margin improved from 3.1% to 3.3%, even with a one-off of CHF8m flattering the figure in Q1 2016.

Dr. Detlef Trefzger, CEO of Kuehne + Nagel International AG, commented: “The good result in the first quarter 2017 supports our optimistic outlook for a continued successful business development this year. In Seafreight and Airfreight we are experiencing strong growth and have gained significant market shares. This increase in volume and productivity as well as cost control mitigated the ongoing pressure on margins. Our strategic approach for overland and contract logistics led to a further improvement of results. We have established a good basis for the second half of 2017.”

Source: Kuehne + Nagel