Panalpina continues to outperform the market

Panalpina’s performance in the third quarter is a continuation of the form it has shown over much of 2013 with modest but above market growth in volumes and profits.

Net forwarding revenue fell slightly to CHF1.7bn, but gross profit hardened and Earnings Before Interest, Depreciation and Amortisation (EBITDA) jumped by more than 100%, in part flattered by exceptional items, to CHF48.3m. Underlying EBITDA was up 60%, with the figure over the past nine months up 34.8%.

In the air freight forwarding sector, the company increased volumes by 4% year-on-year in the third quarter, above the 1% which Panalpina describes as the overall market growth. That said, air freight rates hardened during the same period, compressing margins for the forwarder with gross profit up only 1% year-on-year.

For the nine months of 2013, the sector’s gross profit is down 2% year-on-year, whilst gross profit per tonne is down 3%. Slightly contrary to other market reports, it has been Europe that has been weak for Panalpina, whilst Asia-Pacific has seen volumes up 5%.

In contrast, sea freight volumes saw growth of 8% year-on-year in the third quarter with margins hardening. Gross-profit per tonne increased 1% over the first nine months as compared to the same period last year, although it fell 1% over the past quarter. The market picture here was the reverse of air freight, with Europe leading the increase in volume by tonnes with a 12% jump.

However, the best performance at Panalpina was delivered by its contract logistics operation, with third quarter gross profit increasing by 14% year-on-year, something which appears part of a concerted recovery at the business. Gross profit for the quarter was CHF113m.

Although Panalpina’s CEO, Peter Ulber, described the economic environment as “fragile” and that he did not expect the market to be “any more dynamic” in the fourth quarter, the company’s forecasts for growth in both its key air and sea freight markets have edged-up with expected growth in airfreight up from 0% to 1%, whilst for ocean freight expectations have improved from 2-3% to 3% for the rest of this year. It is noticeable that Mr Ulber also commented that Panalpina had to “balance cost control with investments in our business platform”.