Organic strategy drives market share growth at Kuehne + Nagel 13 October 2014

In the first nine months of 2014 the Kuehne + Nagel Group gained market shares and continuously increased volumes. Compared to the previous year’s period, earnings for the period improved by 8.6% (currency adjusted by 12.4%) to CHF480.0 million. EBIT increased by 8.2% (currency adjusted by 12.1%) to CHF607.0 million and the operational result (EBITDA) by 4.6% (currency adjusted by 8.3%) to CHF743.0 million. Gross profit increased by 0.3% to CHF4,699.0 million. Net turnover of CHF13,004.0 million was also slightly above the previous year’s level, currency adjusted it increased by 4.7%.

Part of the Company’s organic growth strategy is to concentrate on internationally operating customer groups, profitable growth and selective market share expansion. Additional key success factors include strict cost control and the continuous enhancement of innovative solutions. This was most clearly demonstrated by the positive development of overland operations.

Kuehne + Nagel grew twice as fast as the market with sea freight volumes increasing by 8.0%. In the first nine months of the year the Company handled 2.9 million TEU, an additional 211,000 TEU more than in the same period of 2013. In a difficult market environment the volume development in South America was rather slow. Import activities into the US increased and Kuehne + Nagel gained additional market shares particularly in the European and North American import business. On a 9-month comparison Kuehne + Nagel was able to keep the EBIT-to-gross profit margin (conversion rate) stable at a high level with 30.2% (previous year: 30.6%). Due to negative currency effects gross profit and the operational result were slightly below the previous year’s figures. Currency adjusted gross profit increased by 4.1% and the operational result by 2.4%.

The situation in the international air freight market stabilised with volumes growing between 3.0% and 4.0%. Kuehne + Nagel increased tonnage by 5.0%, representing 40,000 tons, during the first nine months. Increased volumes in the European export business and strong growth of specific services for customers from the automotive, pharmaceutical and aviation industries contributed to keep momentum high. The perishables business grew, especially in the South American trade lanes. Compared to the previous year’s period, EBIT-to-gross profit margin improved from 25.1% to 27.5%. The operational result increased by 5.9% (currency adjusted by 10.8%).

In the Overland division, the systematic implementation of the ‘Road 2 Profit’ strategy led to improved results in Q3. Sustainable progress was made in the European groupage activities, the overseas business and in the provision of specific industry solutions. Currency adjusted net turnover grew by 3.2% in the first nine months and the operational result improved from CHF22.0 million to CHF47.0 million. EBIT increased by CHF27.0 million compared to the previous year’s period.

In Contract Logistics, the reshaping of the project portfolio towards focusing on complex and scalable solutions is proving effective. Target industries include automotive, high-tech, aviation, pharmaceutical and consumer goods. In addition, the concentration on end-to-end solutions generated new and profitable projects for key accounts. In the first nine months EBIT improved by 8.1% (currency adjusted by 10.1%) compared to the previous year. Currency adjusted net turnover increased by 5.4%; EBIT margin was at 3.3% (previous year: 3.1%).