CEVA continues to improve despite drop in airfreight volumes

CEVA Logistics saw its airfreight volumes decline during the second quarter as a result of the end of old customer contracts and ahead of the start of new ones.
The latest financial results from CEVA show that total air cargo volumes declined by 1.3% year on year to 120,200 tonnes despite the overall market growing by around 4%.
In contrast, Kuehne+Nagel saw air demand increase by 15.7%  and at Panalpina there was a 4% increase.
CEVA put this down to a lag between the loss of customers and new wins starting up. In better news for the forwarder, air yields for the quarter increased by 10.9%.  
The overall company performance for the period also showed improvement. Revenues increased by 7.4% year on year to $1.8bn, earnings before interest, tax, depreciation and amortisation were up 17.9% to $66m and it recorded a profit of $5m against a loss of $45m last year.
Chief executive Xavier Urbain said: “CEVA continues to perform well. We now have achieved seven consecutive quarters of strong top-line growth and stronger EBITDA.
“We continue to reduce our cost base, work on productivity and address our underperforming activities.
“In the first half of the year, margin growth has been skewed towards Freight Management, we expect Contract Logistics to make more progress in the second half of the year as we have largely addressed the issues. We are committed to further improving our margins and are moving in the right direction.”
The company said revenue growth was down to increased volumes in existing contracts and new business wins. Revenue grew well across most sectors, particularly in industrials and healthcare but also in consumer, retail, e-commerce and automotive.
Earlier this year, shipping line CMA CGM announced it would take a 24.99% stake in the freight forwarder, with regulatory approval coming in July and it also launched an IPO of the SIX Swiss Exchange.
Said Urbain: “Whilst still early days, initial benefits from the deleveraging through the IPO are already materialising.
“We have increased business with some existing clients and are engaged in a number of promising discussions.
“In general, we have good momentum in business development. We are also making progress in developing our partnership with our new strategic shareholder CMA CGM.
“Looking ahead, we are confident in further improving our performance this year and in meeting our medium-term targets.”
CEVA has used a substantial part of the proceeds from the IPO and the CMA CGM investment  to repay debt.
As a consequence, net debt as of  June 30 was reduced to $1.1bn compared to $2.2bn  at the end of March.
The company is currently in the process of raising new facilities to refinance the majority of its existing debt at lower interest rates and longer maturities.
Following the deleveraging from the IPO proceeds and refinancing, CEVA expects to reduce its finance charges by more than $100m annually, subject to prevailing interest rates and currency drawings.
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