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Pressure on yields and a dwindling oil and gas market hit Panalpina profits last year.
They fell 40% to CHF52.3m ($51.68m), with net forwarding revenue down 11% to CHF5.19bn.
Like many in the market, the forwarder said it would need to review its operating model in sea freight to return to profitability.
While it saw an uptick in volumes in the fourth quarter, overall sea freight volumes fell 7%, against a 1% rise for the market as a whole, and gross profit fell 8% to CHF 443.8m.
In air freight, however, 2016 volumes were up 10% against a 1-2% rise in the market, in part attributable to its acquisition of Kenyan flower forwarder Airflo. Gross profit rose 2% to CHF595.2m.
Its logistics division, affected by falling oil and gas prices, saw net forwarding revenue fall 8% to CHF571m, while the EBIT operating result fell 18% to CHF1.75m.
Free cash flow was down 39%, although cash and cash equivalents remained flat, following comparatively little impact from exchange rate changes compared with the year before.
“2016 represented a very challenging year,” acknowledged CEO Stefan Karlen.
“Much lower volumes from the oil and gas sector meant that we had to restructure that part of our business during the first half-year. In the second half, the Hanjin collapse and the very busy air freight peak season led to tight capacities and soaring rates which put strong pressure on our margins.
“While we continued to perform well on volumes, pressure on yields impacted our profits.”
The forwarder said its priorities for this year included growth through bolt-on acquisitions, better diversifying its product mix and yield improvement. But it warned that the macroeconomic environment was hard to read, and the air and sea freight markets remained challenging.
“The unusually strong air freight peak season and the temporary capacity constraints in the ocean freight market in 2016, mean we have to concentrate even more on improving our yield management, especially when it comes to our ocean freight operating model,” said Mr Karlen.
“Yields continued to remain under pressure in January and February and we expect the first quarter to come in below the previous year,” he added.
“Despite 2017 being a year of great political and macroeconomic uncertainties, we are keeping to our long-term goals and are confident that we can maintain stable costs to position the business for volume growth.”
Panalpina says it expects the air and ocean freight markets to grow by 2% in 2017.