News / K+N looks past Q1 revenue drop to improved margins from restructure

Swiss 3PL Kuehne + Nagel today said there were emerging signs of improving demand, despite today’s first-quarter results that show a year-on-year 18% decline in turnover and a 28% drop in EBITDA.

Group-wide revenue reached SFr5.5bn ($6bn), compared with the SFr6.75bn it posted in Q1 23, while EBITDA declined from SFr803m in Q1 last year to SFr576m this year.

Revenues declined across its four divisions – ocean forwarding, air forwarding, road freight and contract logistics – despite a gradual year-on-year recovery in volumes.

However, chief executive Stefan Paul argued that recent changes to its organisation – with regional management structures in its sea freight division done away with, as recently reported by Loadstar Premium – would help rebuild its margins.

“In a challenging environment, Kuehne + Nagel started the business year 2024 with solid, but lower, year-over-year results,” he said.

“Our focus on efficiency and streamlined structures allowed us to reduce costs per unit by 12% in sea logistics and 14% in air logistics.

“By discontinuing the regional structure, we have laid the foundations for further growth and enabled more direct access to our customers worldwide,” explained Mr Paul.

According to Loadstar Premium, “addressing the regional management structure is expected to lead to between Sfr70m and Sfr100m of additional cost savings on a run-rate basis…”.

Meanwhile, sea freight revenues declined 28% year on year, to SFr1.9bn, while EBIT was down 43%, to SFr197m. However, year on year, volumes increased slightly, from 987,000 teu last year to just over 1m teu in the first quarter, and gross profit per teu hit SFr502, some way below last year’s SFr695.

Air freight revenues were down 15%, to SFr1.58bn, and EBIT declined 39%, to SFr94m, despite a 3.4% increase in volumes, to 491,000 tonnes. Gross profit per 100kg declined from SFr103 to SFr80.

Its road division saw revenues decline by a more modest 10%, to SFr860m, with EBIT down 42%, to SFr30m, although recent M&A activity ought to boost these numbers over the coming quarters.

The consolidation of Canadian customs broker Farrow took place in February, while the takeover of City Zone Express is expected to complete in the second quarter.

“We have strengthened our offering for our South-east Asia customers through our strategic acquisition of City Zone Express, a Penang, Malaysia-based road logistics service provider,” said Mr Paul.

Finally, its contract logistics arm saw revenues decline 10%, to SFr1.14bn, accompanied by an 11% drop in EBITm to SFr55m – however, it attributed 3% of this decline to negative currency effects.