Kuehne + Nagel International AG - Financial Statements 2004

• Turnover up 21.1 per cent to CHF 11,563 million

• Operational result (EBITA) increased 23.5 per cent to CHF 390 million

• Net earnings improved by 23.1 per cent to CHF 241 million

• Recommendation to significantly increase dividend

"2004 was a very successful year for Kuehne + Nagel. We achieved our targets. Sea and airfreight operations continued to generate profitable and above average growth. In Contract Logistics, margins improved largely due to process optimisation. Good progress in the overland transportation business underlines that our recent investments are paying off," commented Klaus Herms, CEO of Kuehne + Nagel International AG, on the business year 2004.

The business unit Sea & Air Logistics achieved strongest growth in the booming traffic from and to China, while at the same time substantially increasing volumes on other trade lanes as well. The dynamic growth was further supported by the high demand for Kuehne + Nagel's standardised IT-based sea and airfreight products worldwide, the intensified integration of these services into complex logistics solutions, and activities in new markets. The significant increase in volumes in sea and airfreight compensated for both margin pressures and adverse currency effects.

Rail & Road Logistics recorded a considerable increase in business volume and profitability. In addition to organic growth in the traditional full and part truck load business, groupage activities in Germany were notably strengthened through the successful integration of Pracht Spedition + Logistik GmbH. A rise in customer demand for block train solutions and intermodal concepts helped capture additional market shares in rail transportation.

Contract logistics results improved, benefiting strongly from productivity increases, better capacity utilisation in North America and stable business performance in Europe. The EBITA margin rose from 2.6 to 4.2 per cent. Following the termination of the cross-shareholding arrangement with SembCorp Logistics Ltd, Kuehne + Nagel has taken up its own contract logistics operations in the Far East, and is thus able to meet its customers’ demand for high value, integrated logistics solutions.

Dividend

Based on the substantially improved results, the Board of Directors of Kuehne + Nagel International AG will recommend to the Annual General Meeting on May 2, 2005, the allocation of an increased dividend of CHF 4.50 per share (previous year: CHF 3.50); a 28.6 per cent rise compared with the previous year.

Turnover

Overall turnover in 2004 increased 21.1 per cent to CHF 11,563 million.

At CHF 8,713 million, the business unit Sea & Air Logistics returned 75 per cent of turnover. Rail & Road Logistics registered a 54.6 per cent increase. Contract Logistics turnover remained at the previous year's level.

Gross profit

Compared with the previous year, gross profit, which in the forwarding and logistics industry provides a better indication of performance than turnover, improved by 12.5 per cent to CHF 2,322 million.

In seafreight, margin pressures and adverse currency effects were compensated by an above average 28 per cent growth in volumes. Gross profit for this business field was up 13.3 per cent. In airfreight, the 20 per cent growth in tonnage led to a 14.6 per cent increase in gross profit. Due to organic and external growth through acquisitions, Rail & Road Logistics gross profit grew by 82.7 per cent. New business wins in Contract Logistics compensated for the loss of a major customer in North America. Gross profit in this business unit was therefore only 1.6 per cent below last year's level.

Operational result (EBITA)

Thanks to an increase in market shares, higher productivity and stringent cost management the operational result improved by 23.5 per cent to CHF 390 million.

In Sea & Air Logistics, EBITA was up 20.6 per cent. Strong seafreight growth led to a 20.2 per cent increase in the operational result. In airfreight, the 21.3 per cent EBITA improvement was mainly due to cost optimisations through process enhancements.

In European rail and road transportation, Kuehne + Nagel maintained its position despite fierce competition and margin pressures. The operational result in Rail & Road Logistics increased by 63.9 per cent. Business experienced fast growth through the successful integration of Pracht Spedition + Logistik GmbH, effective as of January 1, 2004, and new intermodal traffic concepts. The acquisition of Häring Service Company in Germany and of GT Spedition in Denmark marked further steps in strengthening European overland operations.

Nacora, the insurance broker subsidiary, was able to capture additional market shares worldwide. However, extraordinary provisions in the area of transport liability led to a 51.3 per cent decline in the operational result to CHF 7.5 million in comparison with the previous year.

Despite different economic conditions, all regions improved their operational results in 2004. Asia Pacific grew 7.9 per cent (CHF 102.5 million / 2003: CHF 95.0 million) and Europe 14.1 per cent (CHF 190.7 million / 2003: CHF 167.1 million). At CHF 85.4 million (previous year: CHF 46.6 million), the Americas recorded an 83.3 per cent increase, which was mainly due to the turnaround in the US contract logistics business and intensified cross selling activities. In the Middle East, Central Asia and Africa, organisational and business structures were aligned to the respective markets, which accounted for a 61.1 per cent growth (CHF 11.6 million / 2003: CHF 7.2 million).

Outlook

Kuehne + Nagel's global network and its extensive scope of services are an ideal platform for providing tailor-made logistics solutions increasingly demanded by companies in trade and industry. The availability of state-of-the-art information logistics products is crucial for success in this business. In order to optimise costs, companies are focusing on a few selected logistics providers with proven expertise in supply chain management, industry know-how and the ability to deliver integrated services on a global scale. In view of the planned expansion of contract logistics activities in all regions, Kuehne + Nagel is set to benefit from this trend even stronger. In sea and airfreight, it is the company's objective to grow twice as fast as the market while maintaining its level of profitability. In European road transportation, a three-year development plan will enable Kuehne + Nagel to join the market leaders.

"In 2004, the Kuehne + Nagel Group again convinced through strong performance and ongoing momentum," said Klaus-Michael Kuehne, Executive Chairman of the Board of Directors of Kuehne + Nagel International AG. "An ever growing number of customers is leveraging our integrated logistics services to increase competitiveness and efficiency. We are confident to continue the positive development in  volumes and earnings throughout the current year."