K+N profit rises 4pc to US$4.89 billion in first 9 months, sales up 6pc

SWISS logistics giant Kuehne + Nagel has released its results for first nine months, experiencing a four per cent increase in gross profit to CHF4.56 billion (US$4.89 billion), drawn on a six per cent growth in revenue to CHF15,471 million, according to the company's statement.

But the operational profits (EBITDA) shrank 5.6 per cent in January-September period year on year to CHF687 million. Excluding the EU antitrust fine in the first quarter, net profits decreased 7.4 per cent to CHF423 million, including the one-off item to CHF358 million.

The company saw a rebound in third quarter due to "volume increases in sea freight and air freight and intensified cost management." Compared to the third quarter of 2011, its turnover was up 12.4 per cent and gross profit 6.9 per cent. As a result, its EBITDA improved 3.1 per cent in the third quarter year on year.

Kuehne + Nagel CEO Reinhard Lange said: "The improvement of results in the third quarter makes us confident of reaching the profitability targets we have set ourselves for the full business year 2012.

"Intensified cost management as well as a continuous improvement of the services for our customers will be the foundation for profitable growth."

From January to September, Kuehne + Nagel increased container volumes by seven per cent. But the market growth has experienced substantial slowdown in the third quarter in most trade lanes.

In Asia-Europe trade, the decline of volumes exceeded 10 per cent, said the company statement. However, Kuehne + Nagel was able to increase its overall volumes by six per cent in the third quarter.

Its EBIT-to-gross-profit margin saw a significant improvement in the third quarter to 32.5 per cent due to effective cost control measures. During the first nine-month period, EBIT conversion was at 30.5 per cent, against previous year's 33.5 per cent. And the operational result was six per cent lower than the same period last year.

But it saw a soft international air freight market in the third quarter. Kuehne + Nagel increased its air freight tonnage by three per cent in the third quarter and by two per cent in the first nine months of 2012, due to good intra-Asia trade and booming export markets in South and North America.

Though seeing an improved gross profit margin, its EBIT-to-gross-profit margin was at 25 per cent compared to the previous year's level at 30.2 per cent. The operational result was thus down 10 per cent.

For road and rail logistics business, the relative volume shrank due to the deterioration of EU debt crisis. But Kuehne + Nagel was still able to increase net turnover by 8.2 per cent in the first nine months of the year, while operational result decreased 9.7 per cent year on year. The EBITDA margin was at 1.2 per cent compared to 1.4 per cent in the same period of last year.

For contract logistics segment, its net turnover increased 3.8 per cent in the first nine months. The company said it was able to sustain its operational result at CHF115 million and the EBITDA margin at 3.6 per cent.