KN HQ 2

Despite declining revenues, Kuehne + Nagel saw an 8% growth in half-year gross profit and a 10% increase in EBITDA after it continued to reap the benefits of its “Focus and Excellence” strategy that seen its industry-specific solutions scaled up and productivity across its global operations improved.

Despite weak global trade levels, KN saw sea freight volumes increase by 5.8%, and for the first time handled over 1m teu in a single quarter – a period characterised by extremely weak freight rates.

Although it did not disclose actual volumes, its consolidated results showed that first-half sea freight revenue suffered as a rates crashed. Its sea freight division turned over Sfr3.93bn during the period, an 11.5% decline on the Sfr4.44bn last year, while EBITDA for the division increased 6.5% to Sfr231m.

A similar pattern was seen in air freight, where revenues declined 4.1% to Sfr1.9bn but EBITDA grew 6.9% to Sfr155m. It said that tonnage in the period increased by 1.3% due to strong export volumes out of Asia, the Middle East and Africa.

Dr Detlef Trefzger, CEO of Kuehne + Nagel International, said: “The first half of 2016 has been shaped by different regional economic development trends. Global trade showed a lack of growth momentum.

“Our strategy to focus on organic growth and gaining market shares by offering industry-specific solutions once again led to increases in volumes and results. Our group delivered a strong performance and has significantly improved gross profit, and therewith increased profit.”

However, its overland and contract logistics arms saw much better performances as it completed the integration of US intermodal solutions provider ReTrans, which was initially acquired in August 2015, and saw a turnaround in its European road transport operations.

Revenues from overland grew by 20.6% to reach Sfr1.56bn while EIBITDA grew by 129.4% to reach Sfr37m.

“Substantial growth in net turnover and gross profit was achieved in the overland business unit in the second quarter of 2016. The fully integrated US-based ReTrans Group and the European business contributed considerably to the positive performance,” the company said.

Meanwhile, its contract logistics division saw a series of new contracts being implemented, and grew revenues by 9.2% to reach Sfr2.46bn while EBITDA was up 19.2% to Sfr124m.

While the management board will be happy with another strong financial performance at a time when many competitors are struggling to shrug off lacklustre trading conditions, there are likely to be lingering worries over KN’s seeming inability to tackle some of its structural weaknesses.

In its recent Global Freight Forwarding 2016 report, freight and logistics consultancy Transport Intelligence identified KN’s “overwhelming reliance” on a few key markets for the majority of its revenues as an area which needs to be addressed.

TI found that in 2015, Europe accounted for 63.4% of total revenue, despite seeing less than 2% revenue growth for the last four successive years, while Germany, the US, the UK and France account for just over half of the company’s revenues.

“KN has been unable to meaningfully grow revenue contributions from its most profitable region, Asia-Pacific, which has only grown by Sfr13m since 2008. Relative to its share of the company’s total revenue, this region is up by only 2.6 percentage points,” Ti added.

First-half revenues from Asia-Pacific were Sfr1.08bn, down from Sfr1.09bn in the same period last year, illustrating Ti’s analysis.

Comment on this article


You must be logged in to post a comment.