Panalpina records growth in both air and ocean freight volumes in the first nine months of 2017

October 24, 2017: Freight forwarder Panalpina has seen group gross profit as well as EBIT increase with every quarter. Year-on-year, Panalpina’s reported EBIT increased from CHF 67.5 million (adjusted YTD 2016: CHF 93.6 million) to CHF 72.1 million and the reported consolidated profit increased from CHF 46.5 million (adjusted YTD 2016: CHF 72.6 million) to CHF 48.4 million.

The logistics giant has seen increase in both air and ocean freight volumes in the first nine months of 2017. “Nine months into the year, Air Freight and Logistics are well under way and showing continued solid performance. In Ocean Freight, we are growing in line with the market but due to continued low margins and productivity levels, the profitability does not meet a satisfactory level,” says Panalpina’s CEO Stefan Karlen.

“Seeing the challenges particularly in Ocean Freight, I am pleased to say that preparations for the next big roll-out of our new operating system SAP TM in the US are progressing as planned.”

Air Freight

Panalpina’s Air Freight volumes increased 8 percent in the first nine months of 2017, broadly in line with market growth. From January to September, gross profit, unit profitability and EBIT in Air Freight increased with every quarter. Reported EBIT in Air Freight increased from CHF 60.0 million (adjusted YTD 2016: CHF 72.6 million) to CHF 69.4 million. The EBIT-to-gross-profit margin for the first nine months of 2017 came in at 15.2 percent compared to 13.2 percent (adjusted YTD 2016: 16.0 percent) a year before.

Ocean Freight

Panalpina’s Ocean Freight volumes from January to September 2017 increased 4 percent year-on-year, in line with estimated market growth of equally 4 percent. Gross profit per TEU decreased 10 percent to CHF 283 (YTD 2016: CHF 314), resulting in a gross profit of CHF 323.4 million (YTD 2016:CHF 345.0 million). For the first nine months, Ocean Freight posted an EBIT loss of CHF 5.5 million, down from a profit of CHF 6.3 million in 2016 (adjusted YTD 2016: CHF 16.0 million).

Logistics

In Logistics, gross profit decreased 16 percent to CHF 245.4 million year-on-year (YTD 2016:CHF 293.3 million), but has stabilised throughout 2017. Logistics is now sustainably profitable, posting an EBIT of CHF 8.1 million for the first nine months of 2017, compared to CHF 1.2 million (adjusted YTD 2016: CHF 5.0 million) for the same period last year.

Outlook

“We are well-prepared for another strong peak season in Air Freight, however it remains to be seen how dynamic the carrier market will be this year,” says Karlen. “Low gross profit margins and low productivity resulting from the inefficiency of our legacy system will continue to hamper us in Ocean Freight, where for the time being we can only grow moderately to avoid incremental costs. It is therefore encouraging that our new operating system SAP TM was successfully implemented in Germany and that the roll-out in the US will commence this year. In Logistics, the focus clearly lies on top-line growth and we will achieve this in the mid to long term by expanding our offering of value-added services.”