Kuehne and Nagel exploits market for strong profit rise in Sea Forwarding


Although the Schindellegi-based forwarder saw turnover and gross profit fall over 2015, this was heavily influenced by the continued strength of the Swiss Franc. In Swiss Franc terms, Kuehne and Nagel’s net turnover for 2015 fell by 4.4% to CHF16,731m whilst gross profit fell by 0.6%.

The phrase in Kuehne and Nagel’s press release about “continued success” is not entirely hyperbole. Although the forwarder saw turnover and gross profit fall over 2015, this was heavily influenced by the continued strength of the Swiss Franc. Profits have continued to rise in both Franc and underlying basis.

In Swiss Franc terms, Kuehne and Nagel’s net turnover fell by 4.4% to CHF16,731m whilst gross profit fell by 0.6%. However, the forwarder calculates that after stripping-out the effects of currency movements, turnover was up 3.6% year-on-year whilst gross profit rose 8.0%. On the same basis Earnings Before Interest and Tax (EBIT) was up 10.9% whereas, before currency effects the number rose just 3.8% to CHF908m.

The core sea freight forwarding business appears to have done remarkably well bearing in-mind how many rivals have suffered. Although in non-currency adjusted terms turnover fell by 5.4% year on year, profits in terms of EBIT jumped by 15.3% to CHF459m. Including Kuehne and Nagel’s FOREX calculations this represented a 24.6% increase. This was delivered by a focus on profitable business such as reefers and less-than-container loads as well as concentrating on specific routes in the Americas. The consequence was a 5.2% increase in profit per TEU.

The performance in airfreight forwarding was similar, with turnover down 4.6% in Swiss Franc terms at CHF4,014m, but EBIT up 11.3%. Stripping-out currency effects this represents a 3.4% and 16.3% increase respectively. However, airfreight tonnage lifted increased 4.7% to 1,250,000 tonnes with margins increased by focussing on industry vertical specific solutions.

Less happy was the situation in Contract Logistics. Here EBIT fell by 22% to CHF119m, which represented a 13% fall even after currency effects. The problem appears to be under-performing contracts in the UK although the wider business continued to grow revenue at a modest 5.5% to CHF4,312m after currency effects.

More complex is the situation at ‘Overland Transport’ which was hit by an anti-competitiveness fine in France. This pushed EBIT down from CHF30m in 2014 to CHF7m in 2015. However, the business continues to expand, largely driven by acquisition.

What is impressive about these figures is the recovery in the forwarding business, and particularly the sea forwarding business. It demonstrates that the forwarding business is not structurally depressed and can exploit the excess capacity which is a feature of so many markets.

Source: Transport Intelligence

Author: Thomas Cullen