CEVA reports solid first quarter
15 / 05 / 2018
Supply chain services giant CEVA Logistics reported a 2018 first quarter revenue improvement of 5.4% (at constant currency) to $1.79bn, while also seeing strong improvements in earnings in both its Freight Management and Contract Logistics segments.
The January to March reporting period also saw Switzerland-headquartered CEVA complete an Initial Public Offering (IPO) on the Swiss Stock Exchange, raising CHF1.2bn in additional finance that will “unlock important growth and margin opportunities,” according to the company.
The first three months of the year is seasonally the weakest quarter for CEVA in terms of revenue, profits, margins and cash flows. But Xavier Urbain, CEVA’s chief executive, commented: “Q1 2018 has shown once more that CEVA is delivering on its transformation with continued growth and consistent EBITDA improvement.
“We’ve seen good momentum and had several new business wins. We have further improved productivity and reduced cost.”
Moreover, Urbain continued: “The successful IPO opens a new chapter for CEVA. The deleveraged balance sheet and the strategic investment by CMA CGM will create important growth opportunities.
“I am confident that we can further improve margins and deliver significant earnings growth in the years to come – our target is to improve adjusted EBITDA [earnings before interest, taxation, depreciation and amortisation) by $100 million in the medium term.”
CEVA’s Freight Management business made $803m in revenue in the first quarter of this year, an increase of 14.4% year-on-year (8.7% in constant currency) as a result of what the company described as “good volumes, new business wins and higher freight rates, notably in Air”.
In fact, the Air Freight segment’s revenue increased by 21.8% year-on-year.
Volume growth at 1.6% was lower than has been seen in recent quarters, reflecting the delayed launch of new business wins and certain contract losses.
However, yields (as measured in terms of net revenue per ton), were up by 17.1% year-on-year, driven by improved procurement and active margin management.
Freight Management EBITDA increased by 50% to reach $15 million, supported by yield improvements, continued productivity increases and efficiencies.
Looking forward, CEVA expects to grow revenue above average market rates and to increase EBITDA margins from the 3.3% recorded in 2017 to at least 4% in the medium term. This should, it said, translate into an additional $100 million in adjusted EBITDA.
For the rest of this year, CEVA predicted “continued good volume and revenue growth in view of the sales momentum and recent business wins”. Further productivity, cost savings and pricing initiatives in Freight Management and other business segments are expected to support an increase in EBITDA margin over the course of the year.
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