News / Panalpina Q1 profits rise, despite 'M&A distractions'

Panalpina

Improved efficiencies helped Panalpina to a first-quarter ebit up 15% to Sfr28.1m ($27.8m), while consolidated profit also rose 15%, to Sfr19.2m, with total operating expenses down 5% at Sfr290m.  

However, forwarding results saw declines and gross profit was down 2.6% to Sfr173.1m. 

Results in air freight implied the company was chasing market share at the expense of profit. While industry results for Q1 are not yet out, the market contracted in January and February, with industry-wide freight tonne km (FTKs) for the latter 4.7% below the level of February 2018; the slowest annual rate of growth in three years.  

However, Panalpina saw volumes grow 8%, although gross profit per tonne fell 10% to Sfr666. Ebit in air fell 7% to Sfr24.9m.  

Ocean, Panalpina’s weak spot, saw year-on-year volumes decline 3%, with gross profit per teu down 2% to Sfr296, leading to a 5.5% decline in gross profit to Sfr102.9m.

Nevertheless, increased efficiencies saw ocean record an ebit of Sfr300,000, up from a loss of Sfr5.8m a year earlier. 

Gross profit also fell in logistics, down 2% to Sfr82.1m, with ebit down from Sfr3.4m to Sfr2.9m. 

Management noted that overall profitability had improved, despite – as all forwarders are saying – the “challenging market environment”.

Chief executive Stefan Karlen also pointed to a success “during a time where considerable management resources were absorbed by the M&A topic”, which demonstrated “underlying quality and strength”, he added. 

Mr Karlen said: “Since the news of DSV taking over Panalpina broke, circumstances have changed. To give any sort of outlook is not only more challenging than ever before, but also constrained by legal restrictions. 

“However, Panalpina continues to conduct business as usual. We have continued to win new business after the transaction was announced and we are determined to keep doing so in the weeks and months ahead.

“We are competing in the market with our strong brand, great capabilities and solid service offering, supporting our customers by providing them with tailored solutions that create value for them. This is our commitment and obligation for the rest of the year.” 

You can see Panalpina’s full first-quarter results here and for more detailed analysis on Panalpina’s first quarter results, please go to Loadstar Premium.