By Alexander Whiteman
Kuehne + Nagel (K+N) saw a record profit performance in 2016, despite diminishing revenue and weak freight rates across air and sea. The Swiss forwarding group’s profits increased 6 per cent year-on-year to $715million, from $649 million in 2015, defying a $400 million, 1.2 per cent, drop in turnover to $19.7 billion, compared with $20.1 billion last year. This was largely the result of the cost of third-party services falling at a faster rate (4.8 per cent) than the drop in revenue, equating to a rise in earnings before interest and tax (EBIT) of $67 million.
The two largest business sectors, air and sea, found themselves fighting significant headwinds as increasing productivity was not matched by improved financial performance. The group’s sea freight division broke a record, carrying more than 4 million TEUs for the first time. But while this equated to a 6 per cent year-on-year uptick in volumes, revenue fell 9 per cent.
Similarly, air freight surpassed its 2015 performance with a 4.3 per cent year-on-year rise in volumes to more than 1.3 million tonnes, but saw a decline of 2.5 per cent to $3.8 billion in revenue.
The overland division, however, more than quadrupled its financial performance, with EBIT at $27 million, compared with $6 million in 2015, and revenue up 10.7 per cent year-on-year to just over $3 billion. Contract logistics also provided healthy financial results, with a more than $200 million upswing in revenue to $4.8 billion, resulting in healthy EBIT of $146 million, compared with $118 million the year before.
Chief Executive Detlef Trefzger said K+N had set itself “ambitious” targets and was pleased to have achieved them. “In a market environment characterised by multiple challenges, we were successful with our focus on customer requirements, our solution-oriented approach and our balanced service portfolio,” he said. “We are well positioned for continued profitable growth, which we will accelerate by selected acquisitions.”
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk)