Mixed results for Panalpina in the third quarter

The third quarter of 2012 showed mixed results for the Panalpina Group. Gross profit increased by 7% year-on-year, driven by a solid performance in Logistics and Ocean Freight, but it was negatively impacted by a weak performance in Air Freight.

Following a disclosure of preliminary figures in October, the group confirmed that the EBITDA came in at CHF 18 million.

“There was light and shadow in the third quarter of 2012,” says CEO Monika Ribar. “On the one hand, Ocean Freight continued with historic record volumes and our investments into Logistics have clearly started to pay off as more and more customers entrust us with Value-Added Logistics Services. On the other hand, our performance in Air Freight was disappointing.”

The group’s net forwarding revenue in the third quarter of 2012 went up by 10% (0% currency adjusted) year-on-year to CHF 1,721 million.

Gross profit amounted to CHF 379 million in the third quarter, resulting in an increase of 7% (-2% currency adjusted). This was the highest quarterly gross profit in almost two years.

Gross profit for the first nine months of 2012 came in at CHF 1,107 million, an increase of 1% (-1% currency adjusted).

In line with the group’s new regional set-up that came into effect on July 1st, 2012, Panalpina now reports in three regions: Asia Pacific, EMEA and Americas.

The Americas (formerly North America and Latin America) recorded the highest quarterly gross profit (CHF 119 million) in this region in almost four years.

In the EMEA region, weak imports were partly offset by strong exports, resulting in a quarterly gross profit of CHF 183 million.

Gross profit in Asia Pacific decreased year-on-year to CHF 78 million due to declining exports to Europe. The group’s gross profit margin decreased slightly to 22% in the third quarter (22.7% in Q3 2011).

Further market share gains in Ocean Freight led to the highest quarterly and year-to-date volumes ever in the group’s history.

For the first time, Panalpina forwarded more than one million TEU in the first nine months of the year.

Volumes in the third quarter were up by 5% (market: +2%) compared to the previous year.

Gross profit per TEU of ocean freight increased by 6% (-3% currency adjusted) year-on-year and improved quarter-on-quarter as the carriers’ rate increases were passed on to customers in the third quarter. Gross profit in ocean freight reached CHF 122 million in Q3 (+11%; +2% currency adjusted).

As reported earlier in October, Panalpina’s Air Freight division performed disappointingly in the third quarter. Volumes decreased by 8% (market: -4%) compared to the previous year.

Europe-related trade lanes were hit hardest and particularly customers in high-tech, telecom and chemicals shipped significantly less by air. In addition, the trend towards smaller shipments was accentuated.

Gross profit per ton of air freight increased by 4% (-5% currency adjusted) year-on-year and remained stable quarter-on-quarter.

Gross profit in air freight amounted to CHF 158 million in Q3 (-4%; -13% currency adjusted).

Various new business wins led to a strong gross profit growth in the Logistics division. Gross profit increased by 23% (+14% currency adjusted) year-on-year in the third quarter and reached CHF 100 million.

The gross profit margin in logistics exceeded 44% for the first time in the group’s history.

Due to the weak air freight and a higher cost base, the third quarter EBITDA came in at CHF 18 million.

The operating expenses were inflated by a one-off extraordinary charge of CHF 12.7 million for accrued salaries of staff leaving the company.

The underlying EBITDA-to-gross profit margin fell to 8% (15% in Q3 2011).

The group’s consolidated profit amounted to CHF 4 million in Q3. For the first nine months of 2012, a loss of CHF 19 million resulted because of the provisions of CHF 59 million for the EU and Swiss antitrust fines made in the first quarter.

Panalpina expects quarterly cost savings of CHF 6 to 8 million mainly due to a reduction in personnel expenses to take effect as of the fourth quarter.

“The costs must come down and we have to do our homework in air freight,” says Ribar.

Panalpina has appointed Lucas Kuehner as its new Global Head of Air Freight as of December  1st, 2012. Kuehner will succeed Henrik Lund who has left the company. Kuehner joined the company twelve years ago and is currently Panalpina’s Managing Director in the USA. Panalpina expects the air freight market to

contract by 3-4% for the whole year. In ocean freight, a market growth of 2-3% is expected. < Korea Shipping Gazette >