CEVA Holdings, one of the world’s leading non‐asset based supply chain management companies, reported results for the three months ended 30 June 2015 with an adjusted EBITDA up 25 per cent year-on-year (up 31.7 per cent in constant currency).
CEVA’s significant increase in profitability in the second quarter illustrates benefits being derived from the execution of the company’s business line strategy implemented 1 January 2015, it said. “The company turned in a solid second quarter performance in the face of several industry headwinds and significant exchange rate fluctuations,” it added.
Second quarter revenue of US$1.776 billion was up 0.3 per cent year-on-year (y-o-y) in constant currency, driven by volume growth, partially offset by freight rates and fuel prices.
Freight Management delivered significant EBITDA improvement as a result of what CEVA said was the company’s continued focus on productivity increases, process improvements and effective transportation procurement drove 250 basis points of improvement in Freight Management margin in Q2.
Volumes held steady in the face of uneven global demand with Q2 air freight volumes up 0.7 per cent y-o-y due to a weakening Asia Pacific export market. Ocean Freight volumes were up four per cent y-o-y reflecting solid growth in Europe, it said.
Contract Logistics maintained industry-leading adjusted EBITDA margins of 5.5 per cent in Q2, up from 4.9 per cent in Q1 driven by an ongoing focus on underperforming contracts and effective warehouse space utilisation. Contract Logistics revenue was up 0.9 per cent y-o-y in constant currency.
CEVA generated $38 million of cash driven by improving earnings performance and continuing working capital management.
“The benefits resulting from CEVA’s new operating model are accelerating,” said Xavier Urbain, CEO of CEVA. “As the second quarter illustrates, execution of our strategy is producing visible progress and increased profitability.
“We foresee significant upside potential by continuing this focus on operational excellence and efficiency for both our customers and ourselves. We continue to invest heavily in Business Development both on Key Accounts and Small and Medium-sized Enterprises to drive topline growth.”
CEVA’s new business pipeline showed continued strength in Q2, above prior year levels with the Freight Management new business pipeline seven per cent above prior year; and the Contract Logistics new business pipeline up 16 per cent y-o-y.
The company also announced the launch of a new global Project Logistics Division, reporting to Helmut Kaspers, COO, Global Air and Ocean Freight. This new division enables CEVA to enhance and provide knowledge transfer of its highly successful Energy (Oil, Gas, Renewal) sector services to other sectors, with a particular focus on Industrials, Aerospace and Mining.
The Project Logistics Division centralises sector and transportation procurement expertise – including CEVA’s Air Charter services, Ocean Chartering, as well as full Turnkey Projects – to enhance quality and drive revenue growth in industries in which CEVA can provide unique value.
The company’s current Project Logistics Global Competence Centers are located in Houston and Rotterdam, and will be expanding to Singapore, Shanghai and Dubai by year-end.