Mar 06, 2017: Panalpina’s gross profit decreased by 3.3 percent to CHF 1,424.6 million in 2016 (2015: CHF 1,473.8 million).
Adjusted for oil and gas related restructuring expenses of CHF 28.0 million, EBIT reached CHF 109.9 million (reported 2016: CHF 82.0 million; 2015: CHF 117.2 million). The adjusted EBIT-to-gross-profit margin came in at 7.7 percent (reported 2016: 5.8 percent; 2015: 8.0 percent) and the adjusted consolidated profit amounted to CHF 80.2 million (reported 2016: CHF 52.3 million; 2015: CHF 88.2 million).
While Panalpina recorded the highest Air Freight volumes since 2007, gross profit margins in both Air and Ocean Freight came under pressure in 2016. This resulted in lower full-year earnings for the international freight forwarding and logistics company. Adjusted for restructuring expenses of CHF 28 million, EBIT reached CHF 109.9 million (-6.3 percent) and consolidated profit CHF 80.2 million (-9.1 percent) in 2016.
“2016 represented a very challenging year. Much lower volumes from the oil and gas sector meant that we had to restructure that part of our business during the first half-year. In the second half, the Hanjin collapse and the very busy air freight peak season led to tight capacities and soaring rates which put strong pressure on our margins,” says Stefan Karlen, CEO, Panalpina. “While we continued to perform well on volumes, pressure on yields impacted our profits.”
Panalpina’s Air Freight volumes increased 10 percent (4 percent organic growth) in 2016, in a market that grew by an estimated 1-2 percent. The air freight industry had the busiest peak season since 2008 and Panalpina recorded the highest air freight volumes since 2007. The company transported 921,400 tonnes of air cargo last year (2015: 836,200 tonnes).
Panalpina’s Ocean Freight volumes decreased 7 percent year-on-year, but increased from quarter to quarter as the year progressed. The market grew by an estimated 1 percent in 2016. Panalpina transported 1,488,500 TEUs (twenty-foot equivalent units) in 2016 (2015: 1,593,900 TEUs). When carriers tightened capacity following the Hanjin collapse in August, rates went up and margins came under pressure.
In Logistics, gross profit decreased 5.8 percent to CHF 385.7 million (2015: CHF 409.3 million) and adjusted EBIT increased to CHF 5.6 million for 2016, compared to CHF 2.1 million last year (reported 2016: CHF 1.8 million). This marked the second positive year for Logistics on EBIT level.
“The unusually strong air freight peak season, and the temporary capacity constraints in the ocean freight market in 2016, mean that we have to concentrate even more on improving our yield management, especially when it comes to our Ocean Freight operating model,” says Karlen.
“Yields have continued to remain under pressure in January and February and we expect the first quarter to come in below the previous year. Despite 2017 being a year of great political and macroeconomic uncertainties, we are keeping to our long-term goals and are confident that we can maintain stable costs to position the business for volume growth.”
Panalpina expects the air and ocean freight markets to grow by 2 percent in 2017.