Things have become somewhat less tough at Kuehne and Nagel. Sales seem stronger and profits are up, if not a lot. The recently released results for the third quarter show that, for the whole company revenue was up 17% year-on-year, gross profit was up 5.2% whilst EBITDA (Earnings Before Interest, Depreciation and Amortisation) was up 2%.
At the core sea freight forwarding business the market seemed to have become more benign for. It is noticeable that revenue grew markedly faster than gross profit over the quarter, suggesting freight-rates not only remain high but that the shipping lines are retaining a substantial proportion of that increase yet volumes did edge-up over the period, with Kuehne and Nagel stating that “active portfolio management resulted in a like-for-like volume growth +2%” over the quarter. The effects of the Red Sea crisis seems to have compensated for the modest growth levels however, with Earnings Before Interest and Tax/TEU up markedly, increasing operational profits up by 8%.
In airfreight forwarding Kuehne and Nagel saw its organic volume growth increase by 5% year-on-year in Q3 with the company stating that the “largest contribution” was from the movement of perishables. EBIT/Kg did edge-up slightly, however possibly due to a higher cost, Earnings Before Interest and Tax (EBIT) fell by 12%.
The Contract Logistics division resumed a trajectory of profit growth, with EBIT up 19% driven, according to Kuehne and Nagel, by the healthcare and e-commerce sectors. The Road Logistics business saw higher volumes as result of acquisitions but “excess capacity” affected profitability, driving down EBIT by 15%.
The third quarter has seen things improve at Kuehne and Nagel, however year-on-year profits are still down over the past three quarters by 22%. Whilst the Contract Logistics business is growing respectably if not very excitingly, the core forwarding operation still seems to be facing uncertain markets despite the improvements in profits. The markets are complex and unpredictable with signs that Kuehne and Nagel has to work hard to drive profits. The Red Sea crisis still looms over both air and sea markets whilst overall global trade growth is not overly dynamic implying a cautious prospect for Kuehne and Nagel in the short-term.
Source: Ti Insight
Author: Thomas Cullen
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