'Well prepared' K+N weathers tough first half, and sees a brighter H2

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Kuehne + Nagel today put a brave face on lower first-half revenue and profit on the back of declining volumes in every division.

It reported group-wide first-half turnover of Sfr9.8bn ($10.4bn), a drop of 7.5% on the same period last year, while ebitda was down 8.1%, year on year, to Sfr799m.

But its second-quarter figures showed declines of a lesser magnitude, with revenue for April, May and June down 8.7% to Sfr4.9bn, while ebitda was down 6.7% to Sfr421m

This, management claimed, was a good result “in light of the challenges posed by the coronavirus pandemic and the global lockdown”.

Chief executive Detlef Trefzger said: “The crisis had profound and sudden negative impacts on international trade. We took the right measures early on and successfully managed Kuehne+Nagel under these difficult conditions.

“We expect the second half of the year to continue to be marked by major uncertainties, for which Kuehne + Nagel is well prepared, thanks to its agile structure, rigorous cost management and high-quality service offerings,” he added.

In its core ocean freight forwarding business, it recorded a second-quarter decline in volumes of 11.7% to 1.1m, which was largely in line with the market, with ocean freight revenues dropping 11.9% to Sfr1.6bn and ebit down 28.5% to Sfr88m.

However, it explained that K+N was “able to gain market share in select, high-yielding industries, including pharma, reefer transport and e-commerce.

“The good volume development in these areas and the cost management did not fully compensate for the significant decline in the high-yielding SME customer portfolio.”

Meanwhile K+N overcame a 22% decline in air freight tonnage to post a 15% year-on-year revenue gain in the second quarter, to Sfr1.36bn, while divisional ebit was up 17% to Sfr110m, reflecting sky-high freight rates during the period.

“A high demand for crisis goods in the second quarter led to a short-term, beneficial shift in the product mix,” it said. “Furthermore, the air logistics business unit purchased charter capacity for its customers on a targeted basis, as belly capacity on passenger flights was not available.

“These factors, combined with active cost management, produced attractive profitability along with expanded market share.”

It added: “With the gradual resumption of passenger services since June, a slight normalisation of the general market conditions is visible.”

Road freight results were also hit by the pandemic, with turnover declining by 21.5% to Sfr721m, and ebit by a enormous 57.1%, to just Sfr9m.

“April and May were characterised by a significant decline in road logistics order volume. However, demand noticeably revived since the month of June,” it said. “In particular, the demand for domestic European transport has broadly improved to pre-crisis levels.”

Demand for contract logistics solutions also declined, although the company claimed its cost reduction measures had mitigated the worst effects. Second-quarter turnover for the division was down 16.3%, to Sfr1.14bn, and ebit was down 9.7%, to Sfr28m.