Panalpina profits fall more than 50% in first half 2016

The Swiss-based global freight forwarder reported net earnings fell to 21.8 million Swiss francs (U.S. $22.11 million) from CHF45.3 million the previous year, due primarily to onetime costs from a capacity realignment in the company’s oil and gas division.    Panalpina in the first half of 2016 saw its net profits plummet 51.9 percent to 21.8 million Swiss francs (U.S. $22.11 million) compared with the same 2015 period, according to the company’s most recent financial statements.
   The Swiss-based global freight forwarder attributed the decline in earnings primarily to the onetime write down of CHF26.1 million in charges related to a capacity realignment in the company’s oil and gas division. Excluding those non-recurring costs, the company posted an adjusted consolidated profit of CHF47.9 million, a 5.7 percent increase from CHF45.3 million in first half 2015.
   “During the second quarter it became evident that the oil and gas business will not bounce back any time soon,” said Panalpina CEO Peter Ulber. “Therefore, we decided to realign our capacities with the current volumes and not wait for the market to recover. We took the full restructuring costs in the second quarter instead of later.
   “The encouraging news is that the rest of the business continued to show considerable robustness against the backdrop of receding markets in air and ocean freight,” he added. “The underlying profitability remained stable for the first half year.”
   Group revenues fell 11.7 percent year-over-year to CHF2.6 billion for the first six months of 2016.
   Panalpina’s airfreight volumes jumped 8 percent year-over-year, thanks primarily to volumes from acquired companies. As a result of higher volumes of perishables but lower volumes in the oil and gas sector, gross profit per ton dipped 4.2 percent to 690 Swiss francs, while gross profit ticked up 3.7 percent to CHF304.5 million.
   Reported earnings before interest and taxes (EBIT) for the airfreight division stood at CHF33.1 million in first half 2016, down 28 percent from CHF46.0 million the previous year.
   On the ocean side, volumes dropped 9 percent compared with first half 2015 in a market that contracted only 1 percent overall. Gross profit per TEU, on the other hand, increased 8 percent to CHF323 Swiss francs, resulting in a gross profit of CHF232.9 million, down 1.9 percent from last year.
   Reported EBIT in the company’s ocean freight division tumbled from CHF12.8 million in first half 2015 to CHF1.3 million in 2016.
   Panalpina’s contract logistics division saw gross profits remain relatively unchanged, slipping to CHF198.9 million in the first half of the year from CHF205.2 million in 2015. Logistics posted a reported EBIT of CHF0.3 million compared with CHF1.5 million in the same period last year.
   Looking forward to the remainder of 2016 and beyond, Ulber said, “We still consider the oil and gas industry as a strategic business and are confident that we have taken the right measures in a market that is slowly stabilizing. In all other industries, our business has shown good momentum and we expect this to continue throughout the year. Cost control remains a key priority as we continue to balance our business and product mix.”