Panalpina’s results show impact of capacity crunch

Panalpina’s net forwarding revenues grew 6.5% in 2017 surpassing CHF* 5.5bn, but its gross profit fell to its lowest level since 2009.

Its gross profit totalled CHF 1,398m, down 1.9% from the year before. Reported EBITDA was 11.0% higher at CHF 146.2m. Group profit was CHF 57.5m, 9.9% higher than in 2017.

Its best results came from air freight. Panalpina’s volumes were 8% higher than in 2016. Its gross profit increased by 7.4%. From January to December, gross profit, unit profitability and EBIT in Air Freight increased with every quarter. CEO Stefan Karlen explained “We secured extra capacity early on in the year, well ahead of the exceptionally strong peak season when global capacity became scarce. Consequently, we were able to serve our customers in a very challenging market where others failed.”

Ocean freight volumes were 2% higher than in 2016. Its gross profit was 3.7% lower though and EBITDA was negative (CHF 13,000). Karlen explained “we kept volumes stable throughout the year, but as margin pressure continued into the fourth quarter, a full-year loss resulted for that part of our business.”

Logistics revenues were down 5.6% and its gross profit was down 14.1%. Ramp-up costs for various projects and investments in a new facility in Singapore impacted its bottom line.

Speaking on the outlook for 2018, Karlen concluded, “The fact that all relevant economic indices are trending upwards makes us reasonably confident for 2018. We have made solid progress in Air Freight and reached a good cruising altitude on which we can build and that will allow us to reach the targeted conversion ratio in due course. In Ocean Freight, we know what needs to be done to make it into calmer waters again and in Logistics, the focus remains on top-line growth by further expanding our offering of value-added services.”

In an interview with The Loadstar Karlen hinted at potential acquisitions, saying “we are targeting bolt-on acquisitions in niche markets. Perishables are on our shortlist, but other niche markets are, too.”

Source: Panalpina

*CHF 1.11=€1/ CHF1.13=$1