Back on track after a weak start for the business year at Kuehne + Nagel

"In the first half of 2012, muted consumption in all parts of the world and increased market volatility influenced the global logistics business,” said Reinhard Lange, CEO of Kuehne + Nagel International AG.

”Softened demand affected in particular the trades from Asia to Europe and North America and slowed down volume development in seafreight and airfreight. Nevertheless, we achieved above market volume growth in both segments. Our industry-specific logistics solutions positively contributed to this development.”

With volumes increased by 8%, Kuehne + Nagel more than doubled global seafreight market growth of approximately 3.5%. Especially in the export business from Asia to the Middle East, South America and Africa, Kuehne + Nagel grew its volumes, and - against the market trend - achieved increases in the transpacific trade lanes.

In the Asia-Europe trades, however, Kuehne + Nagel was also affected by the weak market demand, and volumes stagnated. Several rate increases by shipping lines in short intervals led to margin pressure.

EBIT-to-gross profit margin improved to 30.4% in the second quarter of 2012 (first quarter 2012: 28.3%), but remained below the figure of the previous year’s period. The operational result declined by 10.9%.

The general situation of the global airfreight business continued to decline in the second quarter of 2012. Compared with the previous year’s period the market volumes dropped by 4%.

Kuehne + Nagel continued to focus on the expansion of its activities in special segments - most notably perishables logistics - and to provide industry-specific airfreight solutions resulting in a tonnage increase of about 1% compared to the previous year’s period.

EBIT-to-gross profit margin improved to 27.0% in the second quarter 2012 (first quarter 2012: 23.5%), but remained below the previous year’s figure. The operational result declined by 10.9%.

The overland business performed well in the first half of the year. Despite difficult market conditions, activities in the fields of groupage, full and part loads were successfully expanded. Currency adjusted, net turnover increased by 9.8%.

Particularly in the large economies Germany, France and Great Britain, the business development was satisfactory. EBITDA margin was at 1.9% (previous year: 1.8%).

The operational result improved by 7.4% compared to the same period of 2011. The implementation of a Euro hub in Bad Hersfeld / Hauneck, Germany in June 2012 will be the basis for further efficiency improvements.

In contract logistics net invoiced turnover adjusted for currency effects increased by 6.9% due to solid demand in North Europe, Asia and South America.

In North America strict cost management resulted in profitability improvements, while margin pressure, start-up costs and the closure of unprofitable locations in France and other countries in Southern Europe negatively impacted the result of the business unit in the first half of 2012.

The operational result is unsatisfactory and decreased by 15.3%. EBITDA margin was at 3.3% (previous year: 4.1%). A clear focus has been set on profitability improvement and selected growth.

Karl Gernandt, Chairman of Kuehne + Nagel International AG said, “In the last months, the global economic momentum softened much more than predicted and has also impacted the logistics sector.”

He continued, “In this challenging environment the focus has been set on achieving profitable growth through quality leadership. The Kuehne + Nagel Group demonstrated its strengths in the current market conditions, especially in the second quarter; in the meantime the implemented cost reduction program had a positive effect and the Group is getting back on track to achieve the profitability and productivity goals set for the full year 2012.”  < Korea Shipping Gazette >