Kuehne+Nagel full-year profits helped by “outstanding” airfreight

Kuehne+Nagel reported increases in revenues and profits last year as its airfreight division “continued its outstanding development”.

The world’s largest forwarder saw its revenues for 2018 increase by 11.7% year on year to SFr24.8bn, while earnings before interest and tax (ebit) was up 5.3% to SFr987m and net profit jumped by 4.3% to SFr772m.

In terms of airfreight, the company saw 2018 volumes increase by 11%  to 1.7m tonnes, revenues at the division were up 18.1% to SFr5.6bn and ebit improved by 13.4% to SFr355m.

The company said its airfreight business “continued its outstanding development” in 2018, achieving “significantly higher growth than the overall market”.

In comparison, rival DSV saw airfreight revenues increase by 7.5% and volumes were up 8.3%.

Performance at Kuehne+Nagel was boosted by acquisitions. In 2017, the company received approval for its takeover of Kenya-based perishables specialist Trillvane and announced the purchase of Commodity Forwarders Inc in the US.

At the time the deals were first announced, K+N said that the two acquisitions would add more than 150,000 tons of annual perishables traffic to its network, although it did not specify how much of this would be airfreight.

Performance in airfreight dropped off as the year progressed with the company reporting a 1.6% decline in volumes in the fourth quarter, while ebit was also down slightly to SFr84m.

This reflects overall market trends and also the comparison benefits from its 2017 acquisitions starting to ease off.

“In 2018, global e-commerce and the increasing demand for temperature-controlled shipments and time-critical freight led again to an increase in worldwide transport performance in airfreight,” the company said.

“However, market volume growth only reached about 2.2%, being much below the previous year.

“This was sparked in part by insecure exporters observing protectionist tendencies globally, as well as increasing fuel prices.

“In this environment, Kuehne+Nagel focused again on the expansion of its service offering through acquisitions in particularly fast growing segments.”

At the very end of last year the company completed the acquisition of Quick International Courier, while earlier in 2018 the company acquired perishable forwarder Panatlantic.

“The acquisition of Quick International Courier, one of the major of its kind in the history of Kuehne + Nagel, complements the Group’s portfolio with a global leader in time-critical transport and logistics solutions for the pharma & healthcare and aviation industries,” it said.

“Acquiring the business of Panatlantic Logistics, an Ecuadorian company specialised in the airfreight transport of perishable goods, Kuehne+Nagel confirms its position in the export market to the US, Europe and Asia Pacific.

“With both acquisitions, the company strengthens its presence in high yield growth markets while expanding its industry-specific solutions.”

Looking ahead, the company is not expecting growth to continue at the 2018 rate – it is expecting its airfreight volumes to improve by around 2% while the market is expected to improve by 0-1%.

On the overall company figures for 2018, chief executive Detlef Trefzger said performance had been helped by its digital drive.

He said: “2018 was another successful year for Kuehne + Nagel. Despite the market weakening at the end of the year, we succeeded in increasing our net turnover, gross profit and ebit once again. The consistent implementation of our business strategy was decisive for this success.

“By introducing additional digital platforms, with new highly specialised solutions and targeted acquisitions, we reached important milestones last year and will continue to pursue our journey.

“Even though the growth momentum of the global economy slowed down at the end of 2018, we confirm our goals for the year ahead. In 2019, we aim at growing twice as fast as the market and improving our results further, complemented with selected acquisitions to our portfolio.”

K+N airfreight figures 2018

Kuehne+Nagel finacial figures 2018

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