K+N targets acquisitions as profits reach record levels

Kuehne+Nagel (K+N) will look to make "selective acquisitions" after it managed to increase airfreight volumes ahead of market growth levels last year and overall earnings reached record levels.
The Switzerland-based freight forwarder saw 2016 total group revenues decrease by 1.5% year on year to SFr20bn, while net earnings for the year increased by 6% to a record level of SFr720m and earnings before interest and tax (EBIT) were up by 8% to SFr918m.
Looking at the airfreight division’s performance last year, there was a 4.3% improvement in demand to 1.3m tons, while revenues for the mode declined 2% to SFr3.9bn and EBIT increased 12.4% on last year to SFr298m.
K+N described the airfreight division’s performance as “pleasing”.
“[Our] focus on industry-specific airfreight solutions such as KN EngineChain, a specialised service package for production and spare parts logistics as well as the maintenance of aircraft engines, was a key success factor.
“Kuehne + Nagel’s leading solution for temperature-sensitive goods, pharmaceutical or perishable products, generated significant new business. The improved margins and operational efficiency led to further growth in profitability.”
Revenues would have been affected by a general downturn in airfreight rates last year.
In the final quarter of the year, airfreight demand increased by 10.4% year on year to 362,000 tons.
K+N chief executive Detlef Trefzger said the airfreight volume improvements were driven by improving consumer demand.
"In total, all markets picked up in terms of exports and you can’t isolate a single industry or a single market. We have seen exports growing again growing again from Asia to Europe and North America and exports from Europe to North America and Asia and also exports from North America to both Europe and Asia."
Looking to the year ahead, Trefzger said he was more confident on volumes than he was this time last year.
The company’s overall performance was hailed by Trefzger, who added that the company would be looking to make "selective acquisitions".
“We set ourselves ambitious targets for 2016 and we are pleased of having achieved them and to report a new record result.
“In a market environment characterised by multiple challenges, we were successful with our focus on customer requirements, our solution-oriented approach and our balanced service portfolio. In all business units we gained market shares while further increasing overall profitability.
“Thanks to our portfolio of scalable industry-specific end-to-end solutions and our operational efficiency, we are well positioned for continued profitable growth, which we will accelerate by selected acquisitions.”
On acquisitions Trefzger said: "We have shown that acquisitions are part of our growth strategy with the takeover of re-trans, an intermodal and truck brokerage business in the US, and in order to gain footprint or to get solutions onboard faster we will pursue mergers and acquisitions."