Kuehne+Nagel maintains growth momentum in 2011

In 2011, the globally operating Kuehne + Nagel Group maintained its growth momentum in a challenging market environment and achieved remarkable results.

Net earnings were slightly above the previous year and reached with CHF 606 million a new record high (currency adjusted: increase of 12.2 per cent). Due to the strong Swiss Franc, turnover decreased by 3.3 per cent to CHF 19,596 million (currency adjusted: increase of 9.3 per cent).

The operational result (EBITDA) at CHF 978 million was 2.6 per cent below the previous year’s level (currency adjusted: increase of 9.6 per cent). For the 2011 business year, the Board of Directors will propose a dividend increase to CHF 3.85 per share.

While transport and logistics volumes developed very positively in the first half of 2011, growth steadily slowed during the second half. Cautious consumer and investment behavior in the US and in large parts of Europe, the interruption of supply chains following the disasters in Japan, and the significant rise in commodity prices affected the logistics business.

The only exceptions were individual regional and industry-specific markets, which showed a constant growth in volume throughout the year. These benefited regional and industry-focused logistics providers like Kuehne + Nagel.

In 2011, Kuehne + Nagel handled more than 3 million TEU for the first time. With a volume increase of 11 per cent, the company grew twice as fast as the international container market.
Kuehne + Nagel achieved double-digit growth rates, particularly in the Asian and non-European trades. In the transpacific lanes, Kuehne + Nagel expanded its volume by more than 15 per cent despite market contraction.

The impressive growth of transport volume is largely a result of the Group’s sophisticated product portfolio, innovative and integrated IT-solutions, and increased activities in the LCL (Less-than-Container-Load) segment.

In addition, the successful expansion of the reefer container business, supported by the acquisition of the majority share of the leading operator in New Zealand, is to be mentioned. With volume growth and high productivity Kuehne + Nagel was able to compensate for pressure on margins and investments in the further development of IT systems.

Thus, the operational result remained stable at the previous year’s level; the EBITDA to gross profit margin was at 34.9 per cent (36.0 per cent in 2010).

In 2011, the Kuehne + Nagel Group achieved an invoiced turnover of CHF 19,596 million, compared to CHF 20,261 million in 2010. With CHF 2,552 million, currency effects impacted turnover significantly stronger than in previous years. Acquisitions positively contributed with CHF 459 million.

While North, Central and South America recorded an increase of 0.8 per cent, turnover declined in Europe by 4.5 per cent, in Asia-Pacific by 4.1 per cent and in Middle East, Central Asia and Africa by 2.6 per cent.

In the logistics industry gross profit is a better performance indicator than turnover. Despite negative currency effects of 12.8 per cent, gross profit only decreased by 1.0 per cent compared to the previous year. Acquisitions positively influenced gross profit with CHF 111 million.

The Asia-Pacific region recorded a gross profit increase of 8.5 per cent, and Middle East, Central Asia and Africa of 3.5 per cent. In the Americas gross profit improved by 2.2 per cent whilst in Europe negative currency effects of 11.9 per cent resulted in a gross profit decrease of 2.9 per cent.

Earnings before interest, tax, depreciation and amortization of goodwill and other intangible assets (EBITDA) were CHF 26 million (2.5 per cent) lower than in the previous year, also due to a negative currency impact of CHF 122 million. Acquisitions had a positive effect of CHF 14 million.

With CHF 564 million (57.6 per cent) the biggest contribution to the operational result came from Europe, followed by the Asia-Pacific region with CHF 227 million (23,2 per cent), the Americas with CHF 149 million (15.2 per cent) and Middle East, Central Asia and Africa with CHF 38 million (4.0 per cent).

In view of the solid development of business and the sustainable high cash flow of the Kuehne + Nagel Group, the Board of Directors will propose to the Annual General Meeting of May 8, 2012, to distribute a dividend increased by 40.0 per cent to CHF 3.85 per share (previous year: CHF 2.75) and therefore lift the payout ratio from 55 to 77 per cent.

Uncertainties still persist with regards to the economic development in 2012. Particularly in the first half of the year, global economy and trade are expected to perform less dynamically.

Karl Gernandt, Chairman of Kuehne + Nagel International AG said, “Considering the market and currency turbulences, the diverging economic developments and the devastating natural disasters, which influenced the business environment in 2011, we achieved very satisfactory annual results. The implementation of our global strategy in combination with a clear focus on profitability will again contribute to a positive development of the Group in 2012.”
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