Panalpina says market is slowing

Panalpina says market is slowing    Panalpina had net profit of 32 million Swiss francs ($41 million) in the second quarter compared to a loss of 77.6 million Swiss francs in the same 2010 period, but says the freight market is slowing.
   Revenue was CHF 1.6 billion ($2.1 billion) in the second quarter compared to CHF 1.9 billion in the second quarter of 2010.
   'A year ago we set out to restore profitability in 2011. Halfway into the year we can say that we are well on track. I am pleased with the high organic gross profit growth in our reporting regions North and Latin America, as well as Asia Pacific,” said Monika Ribar, chief executive officer.
   Panalpina's said it focus on profitability has affected volumes.

Ribar

   'After having terminated certain high-volume, low-margin contracts, we were not able to compensate for these volumes fast enough with new business. The market slowdown in the second quarter of 2011 did not help in this regard,' Ribar explained.
   Currency adjusted, Panalpina said it recorded organic gross profit growth across all regions and segments in the second quarter. North America reported the highest gross profit growth in local currencies, closely followed by Latin America. Growth in North America was supported by the oil and gas business, which has gained traction, and new business in other industries.
   Gross profit growth was led by air freight, which was mainly driven by strong yields in a slowing market, but was adversely affected from the strong Swiss franc. Gross profit per ton of air freight was up 9 percent in Swiss francs and up 20 percent net of foreign exchange. Air freight volume was 9 percent lower than the same period last year.
   Gross profit per TEU of ocean freight decreased 7 percent in Swiss francs, but was up 6 percent net of foreign exchange. Ocean freight volumes in the quarter improved 3 percent from the same 2010 period.
   Given the slowing environment, Ribar expects world trade and market growth to turn out weaker than anticipated earlier in the year. Panalpina has lowered its market growth expectations for 2011 to 1 percent to 2 percent for air freight and to 5 percent for ocean freight.
   'In a slowing market it will be difficult to match or even outperform market growth in 2011 but we have set the basis for sustainable, profitable growth going forward. We are absolutely confident that we can achieve the financial targets that we have recently set for 2014,' Ribar said.