News / K+N profits tumble as market 'normalises', but eyes expansion in Asia

Photo: Kuehne + Nagel

Kuehne + Nagel today reported a group-wide 40% decline in revenues and a similar drop in Ebitda for full-year 2023 in what it termed a “normalisation” of the market.

Group turnover for 2023 was CHF23.8bn ($26.9bn) , with a Ebit of CHF1.9bn, leading to a net profit of just under CHF1.5bn.

Sea freight revenues in 2023 were half that of the previous year, while air freight volumes dropped 60%. However, its road transport and contact logistics divisions saw relatively stable income.

“Kuehne + Nagel closed the financial year 2023 with an overall good performance in a persistently challenging environment,” said CEO Stefan Paul.

“We adjusted our cost base to market conditions by intensifying restructuring measures in the fourth quarter. At the same time, we succeeded in gaining market share in Sea Logistics, especially in the SME segment,” he added.

Total sea freight volumes amounted to 4.3m teu, a 1.1% decrease on the previous year, although the company added that “the business unit recorded volume growth in the second half of the year, particularly in the SME segment”, and said it had gained market share on the Asia-Europe and transpacific routes, claiming in its annual report that it became the largest forwarder on the transpacific for the first time.

Sea freight revenues came to CHF8.6bn, down 54% on 2022’s CHF18.7bn, while the division’s Ebit was CHF1bn, a 50% drop on the year before.

Air freight was worse – annual revenues amounted to CHF6.9bn, a 41% decline, while Ebit fell 61%, to CHF555m, on volumes that were down 11%, to just under 2m tonnes.

Road freight turnover was down 11%, to CHF 3.5bn, and Ebit down 9%, to CHF133m, with an encouraging first half of the year being followed by volume declines across its network in H2.

Contract logistics had one of its best performances, with revenues down 3%, to 4.8bn, but Ebit up by 7%, to CHF200m, which was “an all-time high for the business unit and reflects a 6% conversion rate”.

K+N said: “The focus on e-commerce and healthcare logistics yielded above-average growth in these segments and had a positive impact on the business mix.”

The group completed two acquisitions last year, South African air freight specialist Morgan Cargo and Canadian brokerage and road transport firm Farrow.

Today it announced an expansion through Asia after agreeing to buy Malaysia-headquartered City Zone Express, which has more than 500 employees and operates in Malaysia, Singapore, Vietnam, Thailand and China.

“The acquisition of City Zone Express will be immediately earnings-accretive and strategically enhance Kuehne + Nagel’s cross-border road logistics service offerings in Asia,” the operator said.

City Zone Express owns a fleet of 260 vehicles and 80,000 sq metres of warehousing space, and offers cross-border services spanning South-east Asia to China.

Hansjörg Rodi, head of Road Logistics at KN, said: “Asia’s economies are an attractive area for us to develop our road logistics services in line with our Roadmap 2026.

“With City Zone Express, we acquire a reputable regional player whose network and capabilities complement our own. It enables us to better support our customers with tailored road logistics solutions in complex cross-border environments.”