July 23, 2019: Logistics specialist Kuehne + Nagel recorded 5.5 percent increase in gross profit and 2 percent increase in EBIT (Earnings before interest and taxes) in the first half of 2019, helped by growth in seafreight and overland division.
And the company has reported revenue of 10.6 billion euro, 5.3 percent increase compared to the same period in 2018.
However, the airfreight experienced a decrease in volume and according to the Switzerland-based company, the airfreight experienced 5.8 percent decline due to the stagnating markets of some key industries.
The company added: “The global airfreight market continued to be under pressure in an economy characterised by growing trade barriers.”
The Group's selective growth strategy, effective cost control and focus on customer service helped the seafreight volume increase by 4.5 percent year-on-year, while the overall market grew by only 2.5 percent. With 2.392 million standard containers (TEU), the Group managed 103,000 units more than in the same period of the previous year.
The demand for digital seafreight solutions has also shown positive developments. EBIT increased by 11.9 percent to CHF 235 million in comparison to the previous year's period. The EBIT-to-gross-profit ratio (conversion rate) reached an industry-leading high level of 30.1 percent.
Similar to seafreight, growth in overland business was well above the market in the first six months of 2019. In overland, net turnover increased by 3.3 percent and gross profit by 4.9 percent. EBIT improved by 4.7 percent to CHF 45 million. The primary growth drivers in Europe were Germany and France, while large customers performed well in North America. Due to falling oil prices, intermodal business in the US and project business in Middle East & Africa stagnated. With a new digital booking platform, Kuehne + Nagel expanded its offering for overland in Asia. Initially implemented in Thailand, the platform will be rolled out gradually throughout Southeast Asia.
Restructuring in contract logistics continued through the second quarter. Net turnover increased by 4.4 percent and gross profit by 2.7 percent compared to the same period of the previous year. New business in pharma & healthcare, as well as e-commerce fulfilment, yielded positive results. Further efficiency gains are expected in the future leveraging the implementation of the global warehouse management system combined with the new picking technology, already deployed in more than 100 warehouses. EBIT was below last year's figure at CHF 57 million.
Dr. Detlef Trefzger, CEO of Kuehne + Nagel International AG said: "Currently our focus is on addressing the significant changes in airfreight market conditions and on continuing our restructuring activities in contract logistics. With our initiatives to improve our technological capabilities we will become more cost effective and improve customer service. We are well set to successfully meet the challenges of an ever demanding market.”