Switzerland based, global logistics company Kuehne + Nagel’s EBIT margin fell by 0.48 basis points y-o-y to 6.35% in the first quarter of 2025 as EBIT grew 6.9% to CHF 402m on revenues that grew 14.9% to CHF 6,330m. As such, CEO Stefan Paul’s comment that profitability improved was not exactly correct.
The CEO stated, “Kuehne + Nagel has had a strong start in the new financial year. We increased market share, gained new customers and also improved profitability”. In fact only one segment saw profitability improve – the Air Logistics division saw EBIT margin grow 0.57 basis points y-o-y to 6.51% thanks to EBIT growing 23.4% to CHF 166m and net turnover that grew 12.6% to CHF 1,782m.
The CEO continued, “Despite the challenging global economic environment, the company achieved double digit growth in net turnover.” The problem is that EBIT didn’t grow at quite the same pace across the board:
– Net turnover at the Sea Logistics division improved by 29.8% to CHF 2,499m but EBIT grew just 6.6% to CHF 210m, leading to an EBIT margin fall of 1.83 basis points to 8.4% as sea distances between Asia and the West increased due to the Red Sea crisis
– Led by the weakening European economy, Road Logistics saw EBIT fall 36.7% y-o-y to CHF 19m, and with net turnover at the division growing 1.3% y-o-y to CHF 871m, EBIT margin fell 1.31 basis points to 2.18%
– In terms of EBIT margin Contract Logistics was broadly even y-o-y at 4.84% as EBIT grew 3.6% y-o-y to CHF 57m and net turnover are by 3.4% to CHF 1178m
Ultimately, a publicly traded company is beholden to its shareholders for whom increased returns are a core interest and as such falling margins are more interesting than double digit revenue growth.
Looking ahead, K+N’s leadership have not offered a forecast on results due to the uncertain macroeconomic environment that is problematic for the logistics industry as a whole. A focus for its leadership in the coming months may well be in improving the bottom line, even as uncertainties beset all the markets in which Kuehne + Nagel operates.
Author – Richard Shrubb
Source: Ti Insight
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