News / K+N plays down Hormuz impact on performance

The headline figures for Q1 show operating profit (EBIT) in Sea Logistics declined 46%, to $144m (Sfr113m) year on year, with volumes down 2%.

However, a key mitigating factor in comparative analysis was that the same period last year was characterised by significant  front-loading in anticipation of an increase of US tariffs ahead of so-called Liberation Day.

Cost control was cited by the group as core to the unit’s return to profitability over the first three months of 2026.

As for Air Logistics, Q1 EBIT fell 4% to $141m. Volume growth was flat but yields were better than expected mainly due to change in product mix. Semiconductors and ‘cloud’ infrastructure continued to drive demand.

Stable unit profitability was supported by cost control and product mix.

During Friday’s conference call with analysts, CEO Stefan Paul underlined that there had been no impact on the Sea & Air Logistics division’s gross profit and EBIT from the Middle East crisis.

“In terms of expectations for the near-term, we expect the Q2 EBIT result to be greater than that in Q1 on the back of higher and sustained service intensity during a period of supply chain disruption. As such, we are modestly raising the lower end of our full-year financial guidance,” he said.

In Q2, K+N does not expect the crisis to weigh heavily on activity, other than on the volume trajectory in sea freight.

“Bookings are currently down 70% to 80% in and out for the GCC. The crisis had an impact of approximately 1.5% on volumes, particularly in March. Volumes will most probably be flattish in Q2. But we are confident that we can ‘piggyback’ on certain other tradelanes with growth, particularly from Asia to Europe, offsetting the decline in the Middle East. Yields will likely be stable.” 

He continued: “What we have seen more and more coming into Q2 are the fuel surcharges which we will transparently pass on to our customers. The accent is very firmly on transparency and we will definitely share information with our customer base on a regular basis in order to ensure that everybody understands what is happening,” 

Turning to air freight, Mr Paul said volumes and EBIT were expected to pick up slightly, the latter due to a better product mix that has emerged over the last couple of weeks.

“We are seeing less perishables cargo and significantly less e-commerce, and a gain in the hard cargo segment where we traditionally see higher yields. Paired with the fuel surcharges, this will increase rate levels to a certain degree. 

“So overall, not a huge impact to be expected from the Middle East crisis, not negative, not positive, and the main focus in terms of the EBIT improvement will come from the cost efficiency and cost-cutting programme.” 

Mr Paul also played down the squeeze in air freight capacity and potential jet fuel shortages triggered by the Middle East crisis.

“We have a combination of block space agreements, long and short, with the commercial carriers and we have an established charter operation too with our subsidiary, Apex,” he noted

“In the past couple of weeks, we have secured additional charter operations, especially in South-east Asia markets, where a lot of technology-related goods originate. There is buoyant demand, for example, from the ‘hyper-scale’ semiconductor industry, mainly from Thailand, Vietnam, and Taiwan.” 

On the risk of jet fuel shortages, Mr Paul noted: “It’s no secret that it’s especially [a problem in] South-east Asia – Indonesia, Vietnam, and Thailand – that have the lowest reserves. I think China has significant reserves and we would not worry about China currently. With our strategy of balancing block space and charter agreements and our own capacity, we are well positioned to manage a fuel shortage crisis, if it were to materialise.”