Revenue up at K+N in Q1, but exchange rates and rising costs bite into profits
Despite revenue growth of almost CHF300m (US$300m), Kuehne + Nagel struggled to increase profits in the ...
Kuehne + Nagel (K+N) saw a record profit performance in 2016, despite diminishing revenue and weak freight rates across air and sea.
The Swiss forwarding group’s profits increased 6% year-on-year to $715m, from $649m in 2015, defying a $400m, 1.2%, drop in turnover to $19.7bn compared with $20.1bn last year.
This was largely the result of the cost of third-party services falling at a faster rate (4.8%) than the drop in revenue, equating to a rise in earnings before interest and tax (EBIT) of $67m.
The two largest business sectors, air and sea, found themselves fighting significant headwinds as increasing productivity was not matched by improved financial performance.
The group’s sea freight division broke a record, carrying more than 4m teu for the first time. But while this equated to a 6% year-on-year uptick in volumes, revenue fell 9%.
Similarly, air freight surpassed its 2015 performance with a 4.3% year-on-year rise in volumes to more than 1.3m tonnes, but saw a decline of 2.5% to $3.8bn in revenue.
The overland division, however, more than quadrupled its financial performance, with EBIT at $27m, compared with $6m in 2015, and revenue up 10.7% year-on-year to just over $3bn.
Contract logistics also provided healthy financial results, with a more than $200m upswing in revenue to $4.8bn, resulting in healthy EBIT of $146m, compared with $118m the year before.
Chief executive Detlef Trefzger said K+N had set itself “ambitious” targets and was pleased to have achieved them.
“In a market environment characterised by multiple challenges, we were successful with our focus on customer requirements, our solution-oriented approach and our balanced service portfolio,” he said.
“We are well positioned for continued profitable growth, which we will accelerate by selected acquisitions.”