Panalpina sees strong growth in air freight volumes and margins in 2017
March 7, 2018: Leading freight forwarding and logistics player, Panalpina, ended 2017 with strong growth in air freight volumes and margins, while during the fourth quarter, the margin pressure impacted in its ocean freight business.
During the full year, Panalpina saw a rise in its EBIT, from CHF 82.0 million to CHF 103.3 million. Similarly, its consolidated profits increased from CHF 52.3 million to CHF 57.5 million. Its EBIT and consolidated profit in 2017 reached CHF 106.0 million and CHF 60.0 million, respectively.
“2017 ended with record high volumes and profitability in air freight. We secured extra capacity early this year, which is well ahead of the exceptionally strong peak season. Consequently, we were able to serve our customers in a challenging market where others failed,” said Stefan Karlen, CEO of Panalpina.
“In the ocean freight business, our volumes remained stable throughout the year. However, the margin pressure which triggered off in the fourth quarter resulted in a full-year loss in our ocean freight business. Overall, 2017 demonstrated Panalpina’s robustness as we continued to go through a period of transformation and disciplined strategy execution.”
HIGHER EBIT AND CONSOLIDATED PROFIT
During 2017, Panalpina’s gross profit decreased two percent to CHF 1,397.8 million, while its total operating expenses decreased one percent to CHF 1,251.6 million. Its EBIT and consolidated profit increased year-on-year, but decreased compared to corresponding figures of 2016. Its EBIT reached CHF 103.3 million compared to CHF 82.0 million a year before, and the EBIT-to-gross-profit margin stood at 7.4 percent, up from 5.8 percent.
The consolidated profit increased from CHF 52.3 million to CHF 57.5 million. Barring negative currency impacts, its EBIT and consolidated profit in 2017 reached CHF 106.0 million and CHF 60.0 million, respectively.
Panalpina’s air freight volumes increased by eight percent in 2017. It transported 995,900 tonnes of air cargo during 2017, which was the highest volume in the its history. Between January and December, its gross profit, unit profitability and EBIT in air freight increased in every quarter. Compared to the same period last year, its gross profit per ton decreased by one percent to CHF 642, while its overall gross profit increased to CHF 639.4 million. Similarly, its EBIT in air freight increased from CHF 80.8 million to CHF 110.3 million. The EBIT-to-gross-profit margin stood at 17.3 percent, compared to 13.6 percent a year before.
Panalpina’s ocean freight volumes increased by two percent year-on-year. It transported 1,520,500 TEUs during 2017. Its gross profit per TEU decreased by six percent to CHF 281, bringing gross profit to CHF 427.2 million. Substantially lower margins resulting from a challenging carrier environment and moderately increase in costs due to the ongoing IT system implementation, dragged its ocean freight EBIT loss for the full year to CHF 15.1 million, compared to a loss of CHF 0.6 million in 2016.
In logistics, Panalpina’s gross profit decreased by 14 percent to CHF 331.1 million year-on-year, but it saw a dip in the fourth quarter while it ramped-up investments in various projects, including a new facility in Singapore, which impacted its EBIT margins. For the full year, its logistics business posted an EBIT of CHF 8.1 million, compared to CHF 1.8 million, compared to the same period last year.
“The fact that all relevant economic indices are trending upwards makes us reasonably confident for 2018,” said Karlen.
“We have made solid progress in air freight, and have reached a good cruising altitude on which we can build and reach the targeted conversion ratio in due course. In ocean freight, we know what needs to be done in logistics, however, our focus remains on the top-line growth by further expanding our value-added services,” said Karlen.