Kuehne + Nagel reports record results
Swiss forwarder and logistics giant Kuehne + Nagel Group reported record profit of 585 million Swiss francs ($498 million) in 2008, a 9.1 percent increase over the prior year.
Sales increased 3 percent to 21.6 billion Swiss francs ($18.4 billion) for the year.
'The economic slowdown, which accelerated in terms of scope and pace in the last quarter, severely affected the logistics industry,” said Reinhard Lange, chief executive officer of Kuehne + Nagel International AG. “Thanks to the stable development of our business in the first nine months and the early adaptation of rigorous cost controls, we were able to soften the impact of reduced volumes, while improving results compared with the previous year.'
Discussing the outlook for 2009 the company noted, “For the time being there are no indications that world economy will recover quickly; therefore further volume reductions are expected in all business units. Kuehne + Nagel will counteract this with rigorous cost management and process efficiencies.”
The company gave these details on the major segments of its business:
' Sea freight volumes totaled 2.67 million TEUs in 2008, about 2 percent more than in 2007. It saw significantly increased export volumes in the trade lanes from Asia to North and South America and to the Middle East. However, cargo volumes declined in the Asia-to-Europe and Europe-to-North America trade lanes. Operating earning improved 7.3 percent “due to the ability to provide value-added supply chain management services, cost efficiency as well as a positive performance in niche segments.”
' International air freight was heavily affected by the economic downturn, with December 2008 registering the biggest ever decline in traffic volumes. “Although this development had an impact on Kuehne + Nagel's air freight activities, nevertheless, in 2008 the company increased cargo volumes by 2.1 percent.” The segment saw operating earnings increase 0.9 percent.
' Road and rail volume growth was above the market average during the first nine months of 2008, supported by the successful integration of the two German groupage providers G.L. Kayser and Cordes & Simon. But it was “not immune to the slackening of the overall market in the fourth quarter, with order volumes declining significantly. Operating results were down 32.4 percent compared to the prior year. Takeover of the French Alloin Group, effective Jan. 1, 2009, is seen as an important milestone that “provides a strong foothold in France and is expected to support growth in volumes across Europe.”
' Contract logistics operating profit was down 12.2 percent even though sales held steady. Falling demand from a number of large customers in the United States, Canada and Great Britain resulted in reduced capacity utilization and increased margin pressure and that start-up costs in some Eastern European countries negatively affected the operational result, which was 12.2 per cent lower than in the previous year. ' Chris Dupin