News / Air freight a star performer as K+N gets 2018 off to a flying start

Kuehne + Nagel has reported a strong start to the year, with double-digit growth across the board – and it expects the pace to continue.

Turnover grew 13% to Sfr4.68bn ($4.97bn), resulting in gross profit up 11.8% to Sfr1.84bn and earnings of Sfr184m, up 11.5%.

The most challenging market environment continues to be sea freight, but K+N saw volumes rise 5%, despite the halt in recycling exports to China, which cost it more than 100,000 teu in volumes.

It cited intra-Asian operations as a trigger for an overall, albeit slight, increase in margins and ebit of Sfr97m.

Air freight was stellar, with volumes up 20% following the acquisition of perishable specialists Commodity Forwarders and Trillvane. Exports from North America were particularly strong, said the company, and overall ebit rose 12.5% to Sfr81m.

US intermodal transport and a “continuing strong business performance in Europe” saw overland gross profit rise 16.8%, with ebit up Sfr17m to Sfr24m.

Meanwhile, contract logistics grew at twice the pace of the market.

“Double-digit increases in China and South-East Asia were crucial as well as significant business wins, in particular in the area of e-commerce fulfilment,” said the company.

However, ebit fell from Sfr37m to Sfr34m owing to “the realignment of the production model at a business in the UK, coupled with the costs of introducing innovative technologies and new systems”.

Speaking to investors on an earnings call, CEO Detlef Trefzger said he was confident for the year ahead.

“At the moment, we see strong volume growth, high consumer confidence and spending in all major markets. This should drive opportunities for volume growth.”

In air freight, he added, there was “increased demand for time critical shipments… so the demand for air freight is increasing.”

He added that the overall outlook for air cargo was positive and that growth of about 5% would remain: “Our aim is to grow twice as fast as the market”, he added.

On acquisitions, Mr Trefzger said Kuehne + Nagle was “not shy of sizeable targets”.

“Synergy and competence are the main criteria,” he explained.

And he dismissed CMA CGM’s plan to buy 25% of CEVA as being anything out of the ordinary.

“Shipping lines have always made attempts to expand the value chain, as have we.”

You can see the shortened results here, and the full results here.