CEVA earnings hit by “one-time costs”

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CEVA’s 2018 financial results were negatively impacted by a one-off IPO expenditure and contract logistics issues in Italy. Its EBITDA fell 13.9% to $198m. However, revenues increased by 5.2% in the year, with growth coming in both Contract Logistics and Freight Management.

In Contract Logistics, revenues grew 3.3% to $3,848m, meaning it accounts for 52% of consolidated group turnover. The group noted it had success in implementing new business in North American e-commerce and from industrial customers in Benelux and that it had also seen scope expansion from Healthcare and Consumer Goods customers in Europe. Two contracts in Italy and the bankruptcy of a local partner for temporary staff resulted in additional unplanned costs of $42m in 2018 (including provisions taken for future years). Its adjusted EBITDA was $105m, down from $154m the year before.

Freight management revenues grew 7.3% to $3,508m in the year. Ocean volumes grew 7.9%, but gross revenue/TEU only increased by 1.5%. Air freight volumes fell 0.7%, but gross revenue/tonne grew 9.0%. The company stated it had felt “limited impact from the US-China trade tariffs discussion”. EBITDA increased by $17m to $93m in 2018 resulting from better revenues, productivity actions and improvements in the Valued Added Services (VAS) operations, partly offset by challenges in North America relating to the increased cost of transportation in the US Ground business due to driver shortages.”

Its joint venture Anji-CEVA saw revenues grow by 23.7% at constant currencies to $1.4bn. This was driven by increasing volumes at existing contracts, as well as the impact of transferring CEVA’s Chinese contract logistics business to the division in July 2017. EBITDA for 2018 was up $22m in constant currency to $124m.

The company said new business wins were up 6% in 2018 and that the “IPO and subsequent deleveraging and improvement of the capital structure, has definitely changed customers’ perceptions as well as unlocked many new business opportunities.” Its net debt, which has previously been a severe burden for the company fell by 43% to $1.192m over the course of the year.

Xavier Urbain, CEO of CEVA Logistics, commented “Looking ahead, we are confident in our ability to meet our enhanced medium-term targets with the support of our strategic partner CMA CGM. The organization is on track to accelerate its transformation and turnaround action plan in the next three years and beyond. Our expectations for 2021 are to exceed $9bn of revenue and reach an Adjusted EBITDA of $470-490m which corresponds to an EBITDA margin of 4.5 to 5%.”

Source: Transport Intelligence