News / K+N 'en route for success in 2018', with first-half revenue and profits up

Kuehne + Nagel has continued its strong start to 2018, announcing significant increases in revenue and volumes in its first-half figures.

Revenue and profit growth both hit double-digits, year on year, with net turnover for the six months to June of Sfr10.6bn (up 14.2%) and ebit of Sfr501m (up 10.8%).

Chief executive Detlef Trefzger said the numbers indicated that the company was “en route” for success in 2018, noting “strong volume growth” across all its divisions.

“This growth, combined with active cost management, delivered a significant improvement in results, confirming the consistency of our strategy,” said Mr Trefzger.

“And our high level of industry-specific competence and digital solutions are key factors here.”

As in the first quarter, air freight propelled the business, with volumes up 18.1% at 863,000 tonnes, generating ebit of Sfr182m (up 20.5%).

During an investor call, Mr Trefzger praised the airfreight team for its “tremendous success”, adding: “We also believe it will be possible to hold our cost base flat to where it is now when we enter the peak period in the fourth quarter.”

While its sea freight business continued to lag, in relative terms, it still managed an 8.1% increase in volumes to 2.3m teu, leading to an ebit of Sfr210m (up 6.1%).

K+N said its sea freight division had gained “significant new business”, mainly with its integrated digital solutions, although Mr Trefzger pointed to divisional problems.

“We saw declines in sea freight between the first and second quarters, which we put down to a different cargo mix and margin pressures not going away,” he said.

“It is on us to manage this margin pressures, but we also very much underestimated the increase in bunker costs.”

Despite these problems, K+N said its full container-load shipments, project work, oil & gas and marine logistics activities were drivers of growth in the division.

Overland business saw monumental ebit growth: up 48.3% to Sfr43m, thanks to “dynamic growth” in Europe and North America.

Conversely, contract logistics business remained flat with ebit of Sfr66m, the company citing investments in business development as a factor.

When asked if the company had experienced any impact from tariffs imposed by China and the US, Mr Trefzger said: “Not yet. As long as consumers are willing to pay the taxes and the tariffs, we won’t see any major change.

“But as soon as they decide they don’t want to pay these, that is when we will see the impact of tariffs.”