Record year for airfreight at Panalpina but no updates on DSV and Agility talks

Panalpina’s latest annual report shows that airfreight volumes in 2018 breached the 1m tonne mark for the first time in the company’s history, but there is no further update on its potential takeover or merger.

The Switzerland-headquartered freight forwarder reported a 9.1% increase in revenues to SFr6bn, earnings before interest and tax (ebit) were up 14.6% to SFr118.4m and profits improved by 31.7% to SFr75.7m.

Performance was boosted by its airfreight division, which reported record volumes of 1m tonnes – up 4% on a year earlier and in line with market growth.

It said that growth was driven in particular by perishables – it has made several acquisitions in this area over recent years – automotive, consumer, retail, fashion, technology and machinery parts.

“The airfreight market was impacted by restrictions in airport slots in Europe and Asia, a worldwide shortage of pilots and ground handling capabilities, fluctuations in fuel prices, the restriction on diesel fuel in Germany, and the ongoing uncertainty over Brexit and trade negotiations between China and the US,” the company said in its report.

Revenues at the segment were up 10.1% to SFr3.2bn, but ebit declined 1.8% to SFr108m.

Panaplina said the airfreight market started the year off strongly, but weakened as the months passed by and it struggled to pass on costs, with carrier rates up by between 15%-20%.

Chief executive Stefan Karlen said: “Panalpina performed strongly overall in 2018, which was another year with a very dynamic market environment.

“Airfreight growth rates were strongest in the first quarter of the year, but markets slowed down in the following quarters.

“The softer than expected peak season meant that we could not pass on the higher procurement costs to our customers.

“For the first time in our history, we broke through the 1m ton barrier, further strengthening our position as one of the world’s top airfreight providers.

 “In ocean freight, we improved ebit with every quarter, and even though a small loss still resulted for the full year, we achieved the turnaround.

“Logistics delivered an excellent ebit result. In all, our service quality was well-received by customers and we successfully executed on our strategy.”

Over the coming year, the forwarder expects airfreight volumes to progress in line with the market at around 3%. Perishables and aerospace volumes are expected to lead the improvements.

The company has also continued to invest in its digital products and recently announced the launch of a new customer portal.

Karlen said: “We have put in place a scalable operational platform and organisation, and are now eager to push for accelerated, substantial organic and external growth. In 2019, we will even further increase our customer focus.

“The highlight will be the launch of the new portal that fully digitalises our customer offerings in a modern, engaging manner.

“In the long term, this portal will enable our customers to manage their supply chain needs proactively in a self-service mode, and facilitate an automated and fully integrated customer journey with personalized supply chain tools.”

The company did not provide any further updates on the offer to purchase the shares of the company from DSV or talks over a potential tie up with Agility.

Panalpina confirmed only that it was reviewing the DSV offer and that talks with Agility were at an early stage. It also confirmed that a review of shareholder voting rights, which has sparked a shareholder dispute, would take place.