Ambitious targets met – new record result

* Proposal to the Annual General Meeting on May 5, 2015

Dr. Detlef Trefzger, CEO, commented: “In a volatile economic environment with fluctuating currencies, we were able to simultanously expand our market share and increase results in 2014. The turnaround in the overland business unit made an essential contribution to the considerable improvement in profitability; for the first time profits were reported over four consecutive quarters. I would also like to emphasise the continuously excellent performance in airfreight and the further improvement of results in contract logistics. In seafreight we grew volumes and held margins stable, despite the high volatility of rates and negative currency impacts. By combining our industrial competence, innovative power and effective cost management we are strengthening our market position while at the same time generating added value for our customers.”

Development of the business units

Seafreight
Handling over 3.8 million TEU, which represents an increase of 242,000 containers or 7 per cent more than in the previous year, Kuehne + Nagel grew significantly faster than the global seafreight market, which gained around 4 per cent. In particular the company maximised business opportunities arising from an improved economic climate in the USA and achieved considerable volume increases in the transpacific and transatlantic trade lanes. In the Asia-Europe traffic Kuehne + Nagel concentrated on margin stability and did not participate in the intensive price competition. Specialised solutions such as reefer container and LCL (Less-than-Container Load) saw a solid increase in volumes. Due to high rate volatility and negative currency impacts the EBIT of the business unit was slightly below the previous year, nevertheless the conversion rate remained stable at 30.3 per cent.

Airfreight
In airfreight Kuehne + Nagel continued the successful path in 2014. In addition to improved profitability, the company increased tonnage by 5.3 per cent in a market that grew moderately by 3 to 4 per cent, thereby clearly securing its position as the second largest global airfreight forwarder. Key success factors in this business unit are industry-specific airfreight products, which led to significant business wins in the pharmaceutical, automotive and industrial goods sectors. There was also increased demand for the 2013 launched product “KN EngineChain”, a special service for the transport and handling of aircraft engines. The new online portal “KN FreightNet”, which was brought to market in 2014, underlines Kuehne + Nagel’s innovative power while setting a new standard in the airfreight industry. In comparison to the previous year, EBIT improved by 7.2 per cent. The conversion rate developed positively from 25.3 per cent in the previous year to 27.0 per cent.

Overland
In overland, the turnaround was achieved in 2014. Compared to the previous year EBIT increased by CHF 38 million. The “Road 2 Profit” strategy, which was introduced in 2013 and consistently implemented, showed a swift and sustainable impact. It is based on optimisation of the product portfolio, intense focus on specific customer segments and centralised purchasing of cargo capacity. While priority was given to the improvement of results, the development of innovative services remained in focus: for example the “I2M Overland” product launched in 2014 allows customers to plan and manage their inbound supply chain logistics more efficiently.

Contract Logistics
The favourable development of results in contract logistics continued with qualitative growth and an EBIT increase of 7.7 per cent (in constant currencies 9.1 per cent). This was mainly a result of the focus on scalable solutions and services for internationally operating customers from selected industries. Subsequently, complex and innovative projects with major global customers from the pharmaceutical, automotive and e-commerce sector were acquired in 2014. At the same time the growth of business with existing customers substantially surpassed that of the market. The net turnover in contract logistics increased by 4.4 per cent (in constant currencies by 6.0 per cent). With 3.4 per cent the EBIT margin remained stable at the level of the previous year.

Net Turnover
After customs, duties and taxes the Kuehne + Nagel Group achieved a net turnover of CHF 17,501 million in 2014, which represents an increase of 1.9 per cent compared to the previous year. Negative currency effects impacted net turnover by CHF 546 million (3.2 per cent). All regions recorded increases in net turnover: The Middle East, Central Asia and Africa by 3.5 per cent; Asia-Pacific by 2.1 per cent; the Americas by 1.9 per cent and Europe by 1.7 per cent.

Gross Profit
Gross profit, which is the better performance indicator than turnover for a logistics company, rose by 0.5 per cent to CHF 6,288 million in 2014. Negative currency effects had an impact of CHF 151 million (2.4 per cent). In the Middle East, Central Asia and Africa gross profit improved by 3.9 per cent. In Europe gross profit was up by 0.8 per cent, in Asia-Pacific 0.7 per cent while in the Americas it decreased by 1.8 per cent.

Dividend
The Board of Directors will propose to the Annual General Meeting on May 5, 2015, the distribution of a dividend of CHF 4.00 per share (previous year: CHF 3.85 per share). Due to the solid liquidity position, the shareholders shall additionally benefit from the payment of an extraordinary dividend of CHF 3.00 per share.

Karl Gernandt, Chairman of the Board of Directors of Kuehne + Nagel International AG, said: “The annual result shows: Our business unit strategies have proven to be effective and our targeted efforts at all levels have been rewarded. We set ourselves ambitious targets and we have reached these with a new record result. In 2015 market conditions will again be challenging, therefore the continuous improvement of our performance remains our clear ambition. The Board of Directors is confident, that the positive business development will continue throughout the anniversary year.”