News / Cost-conscious Panalpina stays buoyant despite contracting markets

Swiss forwarder Panalpina today reported third-quarter results, which saw revenue for the first nine months of the year down 12% year-on-year and unadjusted EBITDA tumbling 20.4% to SFr104.6m (US$105.1m).

The company’s results were hit by the SFr26.1m cost of restructuring its oil and gas division in the second quarter. Chief executive Stefan Karlen said that after stripping out this one-off, the company had managed an improved performance.

“Despite shrinking air and ocean freight markets and high margin pressure in the first nine months of the year, we delivered an improved EBIT and consolidated profit (both adjusted for one-offs). Continued high cost discipline, particularly in the third quarter, made this achievement possible.”

Panalpina reported gross profit of SFr1.09bn, compared with SFr1.1bn last year, down 1%. Revenues totalled SFr3.86bn this year, compared with SFr4.41bn for the first nine months of 2015.

EBIDTA for the third quarter was SFr45.4m, a marginal improvement on last year’s SFr44.9m.

However, its main markets were characterised by continuing pricing volatility and flat demand.

Mr Karlen said: “Our air and ocean products developed contrarily. In air freight, volumes increased 9% and decreased by the same amount in ocean freight. This resulted in a practically unchanged overall gross profit when compared with last year.”

Despite what has generally been a contracting market, Panalpina is claiming a successful year so far in 2016 – volumes grew 5% in the first quarter, 11% in the second and 10% in the third – and its nine-month gross profit for air freight grew to SFr453.4m from SFr439.7m last year.

However, the ocean freight market remained flat in terms of volumes. Panalpina’s first-quarter volumes were down 10% year-on-year, followed by an 8% decline in Q2 and another 9% fall in the third. Sea freight gross profit was Sfr345m for the nine-month period, a 5% decrease on the SFr362.2m last year.

The group also saw gross profit at its logistics division decline by 4% to SFr293.3m, mostly due to “lower overland activities in oil and gas”, although it has cut its exposure to the weaker market – it has reduced staff numbers in its energy and project solution division by 25% since January 2015.

Turning around the poor performance of its logistics division – an accumulated SFr38.9m loss from Q2 13 to Q4 14 – was a priority and, since the beginning of last year, Panalpina has closed some 70 sites globally, and transformed a further 35 to perform value-added services.

Mr Karlen added that Panalpina would “continue to seek growth opportunities” as a way of mitigating what is expected to be an unfavourable air and ocean market environment, as well as volatile freight rates.

“We are absolutely committed to maintaining our cost discipline, while at the same time intensifying our focus on top-line growth.

“It is our firm intention to grow organically, but also by way of bolt-on acquisitions. In this process, we don’t expect any tailwind from the markets in the foreseeable future,” he said.