Friday, April 18, 2014

KUEHNE & NAGEL

From Supply Chain Asia for Kuehne & Nagel --
Kuehne + Nagel still seeing tough markets Written by
Kuehne + Nagel still seeing tough markets
The performance of Kuehne + Nagel over the past quarter implies that, despite the optimism of many service providers during the results season, logistics markets have remained difficult. The Swiss based forwarder and contract logistics provider saw net turnover fall slightly but Earnings Before Interest and Tax (EBIT) grew by 12.4 per cent year-on-year to CHF190m.
Results in its core sea container freight business were weak. Even though K+N saw container volumes increase by 6.9%, revenue fell year-on-year 3.6 per cent, gross profit edged down by 2 per cent whilst (EBIT) was down 4 per cent. This suggests that average container rates are falling. The company stated that business from Europe to North America and Asia “increased substantially” but Latin America was not strong. Kuehne and Nagel ascribed weakness in pricing to “volatility” although they assert that the “EBIT-to gross profit-margin” was “stable” at 28.8 per cent.
The situation in air freight was slightly better with EBIT up CHF9m to CHF62m, but revenue was flat on the back of tonnage up 1.4 per cent. Demand appears to be ‘bouncing-back’ in North America and Europe but not in Asia and, surprisingly, the Middle-East and Africa. K+N claim that their ability to grow their margins is due to better management, so it is difficult to assess whether rates are improving or the forwarder has simply been better at avoiding rate-cuts for customers.