Kuehne + Nagel Group demonstrates strength
While turnover decreased by 19.4 per cent to CHF 17,406 million, gross profit of CHF 5,863 million was just 6.2 per cent below the previous year. Including an extraordinary provision of CHF 35 million related to competition investigations, net earnings decreased by 20.2 per cent (14.2 per cent excluding provision) to CHF 467 million.
For the 2009 business year, the Board of Directors will propose the same dividend as in 2008.
Kuehne + Nagel Group
Operational result (EBITDA)
Kuhne + Nagel International AG
Dividend per share
* Restated for comparison purposes.
** Proposal to the Annual General Meeting.
<media 2431 - download>Datasheets</media>
<media 2433 - download>Consolidated Financial Statements 2009</media>
Karl Gernandt, Executive Vice Chairman of the Board of Directors, said “The good performance of the Kuehne + Nagel Group in the crisis year of 2009 was due to its operational strengths and the timely and consistent execution of its strict cost management and commitment to market share expansion. Thus, we were able to considerably strengthen our global market position. In addition, we took advantage of the crisis to further improve organisational and operational efficiencies in line with our profitability objectives.”
As a result of the economic crisis, in the first half-year 2009 the logistics industry suffered unprecedented declines in turnover and volumes, both in international and national freight forwarding and in contract logistics. This development led to a reduction of transport and logistics capacities. In the second half of the year, the economic contraction began to ease and logistics demand started to recover.
Market share gains and strong operational performance
Kuehne + Nagel’s anti-cyclical investments in sales and the accelerated development of industry-specific solutions led to market share gains in all business fields. The increase of EBITDA margin from 4.7 to 5.1 per cent was due to the early and consistent alignment of cost structures to the reduced transportation volumes, significantly increased productivity and continued process optimisation.
As already communicated in October 2007, international freight forwarders including Kuehne + Nagel have been subject to investigations by various competition authorities. Based on the negotiations with the US Department of Justice (DoJ), Kuehne + Nagel expects that it will be possible to reach a settlement. The company has accordingly set aside a provision of CHF 35 million to cover all possible costs connected with the case. The provision affects the business field seafreight with CHF 10 million and airfreight with CHF 25 million respectively.
In 2009 the seafreight business was caught in the down-current of world recession. Worldwide volumes fell for the first time in global containerisation history. Kuehne + Nagel, however, managed to win market share against the trend in many trade lanes and strengthened its position as global market leader. Important factors were its sophisticated, value-creating product portfolio, customer focussed IT solutions and increased group-wide sales activities. Kuehne + Nagel’s 4.6 per cent volume decline was remarkably moderate compared with the approx. 12 per cent overall market decline in seafreight volumes. In comparison with the previous year, EBITDA margin increased from 4.6 to 5.0 per cent, while the operational result decreased by 17.9 per cent.
The global airfreight market experienced an unprecedented slump in demand beginning in the fourth quarter 2008, a situation that did not stabilise until July 2009. For the whole year, the airfreight market declined by 12 per cent. To counteract the effects of the recession, Kuehne + Nagel also increased its sales activities in this business field and concentrated on marketing its highly specialised services for niche segments. Due to these efforts, the 9.2 per cent volume decline was less than the overall market average. Thanks to continued market share gains, Kuehne + Nagel advanced to the third place in the ranking of global airfreight forwarders. At 5.6 per cent (previous year: 5.7 per cent) EBITDA margin remained stable, the operational result decreased by 28.1 per cent.
Road & Rail Logistics
Kuehne + Nagel was able to partly compensate for the substantial recession-induced fall in European road transport volumes through market share gains in fields of full truckload (FTL) and less than truckload (LTL), along with solid business performances in Germany and France. The French Alloin Group, acquired by Kuehne + Nagel in 2009 and whose integration progressed well during the year, made an important contribution to the result development and the better utilisation of the European overland network. Compared with the previous year, EBITDA margin increased from 0.8 to 2.1 per cent and the operational result improved by 126.1 per cent.
Growth impulses and synergies are expected from the consolidation of the Road & Rail Logistics and Contract Logistics business units under one management responsibility, a measure in effect since January 1, 2010.
Thanks to well-filled order books for industry-specific solutions and strict cost management Kuehne + Nagel achieved stable contract logistics results despite significant demand fluctuations, regional variations in warehouse capacity utilisation and increased price pressure. The Lead Logistics Solutions business segment proved a growth driver as, especially in a difficult economic environment, the efficient management of complex supply chains gained in importance. EBITDA margin remained at the previous year’s level of 4.6 per cent, while the operational result decreased by 6.9 per cent.
Kuehne + Nagel optimised its portfolio consisting of properties and leasehold premises. At the end of 2009, after commissioning new logistics properties in Germany, France, Canada and the United Arab Emirates, Kuehne + Nagel’s freehold portfolio comprised 123 logistics facilities and office buildings in 21 countries.
The Nacora Group, operating in the global insurance broker business, delivered satisfactory results in 2009 despite reduced business volumes. Its specialised cargo insurance expertise, customer orientation and service quality contributed to the favourable business development.
The Kuehne + Nagel Group posted an invoiced turnover of CHF 17,406 million, a 19.4 per cent decrease compared with the previous year (including negative currency effects of 5.5 per cent). Acquisitions had a positive effect of CHF 650 million.
The largest turnover decreases were recorded in the Americas (25.0 per cent), the Asia-Pacific region (22.6 per cent) and in Europe (18.5 per cent). Kuehne + Nagel’s organisations in the Middle East, Central Asia and Africa experienced the least impact, turnover decreased only by 6.1 per cent.
Gross profit – in the logistics and forwarding industry a better performance indicator than turnover – declined by just 6.2 per cent despite a negative currency effect of 7.5 per cent. Acquisitions had a positive effect of CHF 382 million.
In the Middle East, Central Asia and Africa gross profit decreased by 3.8 per cent, in Europe by 4.2 per cent and in Asia-Pacific by 11.5 per cent. In the Americas, gross profit decreased by 14.6 per cent.
Operational result (EBITDA)
Earnings before interest, tax, depreciation and amortisation of goodwill and other intangible assets (EBITDA) decreased by CHF 135 million (13.2 per cent) compared with the previous year. This includes negative effects of CHF 53 million from currency exchange rates and CHF 35 million related to the competition investigations. Acquisitions positively contributed CHF 40 million. Regionally, the biggest contribution came from Europe (CHF 579 million resp. 65.4 per cent), followed by the Asia-Pacific region (CHF 140 million resp. 15.8 per cent), the Americas (CHF 128 million resp. 14.5 per cent) and Middle East, Central Asia and Africa (CHF 38 million resp. 4.3 per cent).
Despite the difficult global economic environment, the Kuehne + Nagel Group again has achieved a respectable result. Therefore, the Board of Directors will propose to the Annual General Meeting of May 18, 2010 the distribution of a dividend at the same level as 2008 of CHF 2.30 per share.
The Kuehne + Nagel Group is emerging from the crisis year 2009 stronger than before and is well positioned for the expected economic upswing. As there is some uncertainty regarding a lasting global economic recovery, the Group will adhere to its strategy of market share expansion combined with strict cost management.
Chief Executive Officer Reinhard Lange said: “Our aim for 2010 is profitable growth above market average in all business units. In addition, we will further enhance our product offering, develop new areas of value creation and increase our service quality to make Kuehne + Nagel an even more attractive logistics partner for companies in trade and industry.”