News / Weak dollar impacts K+N turnover, but volumes and half-year profits are up

14/07/2014

The world’s largest third-party logistics provider, Kuehne + Nagel, has reported slightly higher half-year net profit on the back of contracting revenues.

The Swiss giant today released its results for the first six months of the year, which saw net turnover of CHFr8.5bn (US$9.5bn), compared with CHFr8.55bn in the same period last year. However, its net profit increased 8.3%, from CHFr289m in the first half of last year to CHFr313m this year.

The company said its revenues and gross profits had been hit by adverse currency factors, with the period marked by the weak dollar in which its services are priced.

As a result, despite an 8.2% increase in container volumes – around double the general market growth – to 1.89 million teu during the period, the company’s turnover in its seafreight segment actually declined from CHFr4.5bn last year to CHFr4.4bn this year.

Similarly, airfreight volumes for the group increased by 4%, it said in a management statement, but revenue declined slightly, from CHFr2.05bn last year to CHFr2.903bn this year.

However, earnings before interest and tax (EBIT) grew to CHFr122m from CHFr110m last year.

“Once again the excellent performance in airfreight is to be highlighted,” said chief executive Detlef Trefzger.

KN chief executive Detlef Trefzger

“The primary factors for this positive development were the intensified sales of specific solutions for the automotive, pharmaceutical and aviation industries, as well as the increase in tonnage, especially in the European and South American export business,” the company said in its half-year analysis.

But the most impressive turnaround was seen in its overland transport operations, which has been the subject of a root-and-branch strategic reform called “Road 2 Profit”, which first saw it return to the black in the last quarter of 2013.

Revenue in the overland division grew to CHFr1.59bn from CHFr1.53bn, and it delivered an EBIT for the first half of CHFr16m, compared with a CHFr5m loss in the first half of 2013.

K+N’s contract logistics arm also saw improved results – the benefit of a decision to focus on its biggest multinational clients. Turnover in the division was up from CHFr226bn to CHFr2.34bn, while EBIT rose 9.4% to reach CHFr70m.

“By focusing on internationally operating customer groups with demanding logistics and supply chain management requirements, as well as on the provision of industry-specific logistics solutions, we were able to increase volume growth in all business units in the first half of 2014. At the same time our effective cost management supported the improvement of results,” Dr Trefzger continued.

Geographically, the vast majority of K+N’s business continues to come from Europe, where it earned CHFr6.26bn, compared with CHFr2.23bn in the Americas; CHFr1.07bn in Asia-Pacific and CHFr799m in the Middle East and Africa.

With a group EBIT of CHFr396m for the first six months of the year, it remains somewhat off the long-standing company target of hitting the CHFr1bn per year EBIT.