Panalpina sees solid half-year results

by Payload Asia

International freight forwarding and logistics company Panalpina improved overall profitability in the first half of 2014 with group gross profit and EBIT, which were significantly impacted by currencies, both increased two per cent reaching CHF 777.9 million (US$862 million) and CHF 60.1 million respectively.

Logistics contributed to the solid results by cutting losses and expanding its value-added services, the group said. Air freight and ocean freight volumes grew four and eight per cent respectively, but unit profitability was affected by a challenging market environment in the same period.

“The results for the first half of 2014 show two things,” says Panalpina CEO Peter Ulber. “One, our uncompromising execution of the strategy that we outlined in November is starting to bear fruit. Logistics has cut losses considerably. Two, there is still a lot of work to be done in terms of profitability, especially in ocean freight, where – expectedly – it will take some time to make it to calmer waters.”

Panalpina’s air freight volumes grew four per cent in the first six months of 2014, in line with market growth, it said. While rates remained under strong pressure, Panalpina put the focus on trade lane optimisation. Gross profit per tonne decreased four per cent to CHF 745 (HY 2013: CHF 778). 

As a result, gross profit remained practically stable at CHF 310.8 million (HY 2013: CHF 312.2 million). Air freight achieved an EBIT of CHF 57.3 million, slightly less than in the same period of last year (HY 2013: CHF 59.6 million). The EBIT-to-gross-profit margin for the first half of 2014 decreased to 18.4 per cent (HY 2013: 19.1 per cent).

Looking ahead Ulber said turning around loss-making operations will continue to be a firm focus. “In the mid- and long-term better IT systems and processes will help us improve productivity and profitability as we keep restructuring and rolling out our new operational system SAP TM,” says Ulber. Panalpina expects the air and ocean freight markets to grow by 3-4 per cent and 4-5 per cent respectively in 2014.