Kuehne & Nagel net profit was down 17% in the 1st quarter of 2009

20.04.2009 (17:14)

The largest freight forwarder, Kuehne & Nagel, said 1Q net profit was down 17%.

Swiss freight forwarder Kuehne & Nagel International Holding AG (KNIN.VX) said Monday 1Q net profit was down 17%, and said it would adhere to its rigorous cost control as the global economic recovery remains elusive.

The company said it leveraged an effective cost-cutting programme and increased sales activities to counteract the severe, recession-related decline in volumes in the transport and logistics business. Compared to the previous year's period, gross profit reduced just by 7.1% (currency adjusted: + 3.2%), the operational result (EBITDA) by 12.2% (currency adjusted by 4.6%) and net earnings by 16.9% (currency adjusted by 10.3%).

Seafreight

In the global seafreight market, the negative trend from the fourth quarter 2008 continued. While Kuehne + Nagel was affected by this development in the first two months, it was able to gain additional market share in March. The result was a 13% volume drop in the first quarter of 2009, which was less than the market average. Due to strict cost management, the operational result was only 4.7% (currency adjusted 2.6%) below previous year. EBITDA margin increased from 4.4 to 5.3%.

Airfreight The airfreight business was particularly affected by the recession, with a global market decrease of more than 20% compared with the previous year's period. Strict cost control and intensified sales activities mitigated the impact on Kuehne + Nagel's performance. Thus, despite an overall volume decline of 17.9% compared to the previous year, substantial new business was generated. The operational result decreased by 10.3% (currency adjusted 6.6%), while the EBITDA margin grew from 6.1 to 7.9%.

Road & Rail Logistics In the first quarter of 2009, demand in European road transport weakened further. For example in Germany, a core groupage market, Kuehne + Nagel experienced a 20% volume decline in the first two months of the year. As of January 1, 2009, the French Alloin Group was fully consolidated in the Kuehne + Nagel Group's financials, the 31.4% increase in gross profit is mainly due to this acquisition. Improved network capacity utilisation and substantial cost reduction could not compensate for the significant fall in volumes. The operational result was 45.5% (currency adjusted 20.5%) lower than in the previous year's period. Margin was at 1.0% compared with 1.5% in the first quarter of 2008.

Contract Logistics The global contract logistics market continued to decline and was impacted by strong margin pressure in the first quarter. Kuehne + Nagel compensated for falling customer volumes with new business, and counteracted high fixed costs and insufficient warehouse utilisation through stringent cost management and workforce reductions. Nevertheless, the operational result decreased by 21.3% (currency adjusted 10.2%), the EBITDA margin declined from 5.2% to 4.5%.

"The solid performance in the first quarter confirms the efficiency of the measures we have taken at an early stage and implemented on a worldwide scale to adapt our enterprise to today's economic environment," said Reinhard Lange, CEO of Kuehne + Nagel International AG. "Since it remains impossible to predict by when the global economy will recover, we will adhere to our dual strategy of rigorous cost control with a commitment to market share expansion."

Company Web Site: http://www.kn-portal.com,

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