Kuehne + Nagel International AG - Financial Statements 2005

• Turnover grew by 21.5 per cent

• Operational result (EBITA) increased by 19.0 per cent

• Net earnings improved by 32.3 per cent

• Recommendation to increase dividend

“In 2005, Kuehne + Nagel maintained the first half’s pace of expansion through the end of the year. We improved performance and profitability while strengthening our global market position,” said Klaus Herms, CEO of Kuehne + Nagel International AG. “In addition, through strategic investments we continued to lay foundations for further sustainable growth.”

In keeping with its organic growth targets, Kuehne + Nagel increased its sea and airfreight volumes at more than twice the market rate. Seafreight volume was up 19.4 per cent, air cargo – despite a volatile business environment characterised by high fuel surcharges – increased by 9.4 per cent. The company’s standardised, IT-based services provided a competitive edge, helping secure substantial new business in targeted industry sectors.

The expansion of overland operations continued. Additional companies specialising in groupage forwarding were acquired in Germanyto further strengthen road activities and expand the network. As a result, order volumes increased above average. High integration and restructuring costs, however, led to the expected drop in the operational result.

In Contract Logistics, Kuehne + Nagel boosted its organic growth while maintaining stable margins. Increased business volume and productivity as well as strong operational performance in North America contributed to a considerably improved result. The agreement reached in October 2005 to acquire ACR Logistics, a company with operations in 11 European countries and more than 15,000 employees, builds on Kuehne + Nagel’s growth strategy – the quantum leap has taken effect as of January 1, 2006.

Dividend

Based on the excellent results, the Board of Directors of Kuehne + Nagel International AG will recommend to the Annual General Meeting on May 2, 2006, a dividend of CHF 5.50 per share (previous year CHF 4.50) – a 22.2 per cent increase versus last year.

Turnover

Group turnover for 2005 grew by 21.5 per cent to CHF 14,049 million.

With CHF 10,514 million, the business unit Sea & Air Logistics returned 74.8 per cent of overall turnover. Rail & Road Logistics recorded 31.9 per cent growth, and Contract Logistics 14.0 per cent.

All Kuehne + Nagel regions generated double-digit turnover increases: Europe, 24.5 per cent; the Americas, 16.6 per cent; Asia-Pacific, 15.1 per cent; and the Middle East, Central Asia and Africa, 22.4 per cent.

Gross profit

Gross profit, which in the forwarding and logistics industry provides a better indication of growth and margins, improved 19.2 per cent to CHF 2,769 million compared with the previous year.

Above-average volume growth allowed Kuehne + Nagel to compensate for pressure on margins in the sea and airfreight businesses. Seafreight gross profit increased 20.8 per cent, airfreight 10.8 per cent. Rail & Road Logistics saw accelerated growth from acquisitions raise gross profit by 44.5 per cent while in Contract Logistics, figures were up 13.1 per cent over the previous year.

Regionally, Europe, at 58.2 per cent, made the largest contribution to gross profit, followed by the Americas (26.3 per cent) and Asia-Pacific (11.6 per cent). The Middle East, Central Asia and Africa accounted for the remaining 3.9 per cent.

Operational result (EBITA)

Overall the operational result improved by 19.0 per cent to CHF 453.9 million thanks to strong volume and productivity increases.

In Sea & Air Logistics, EBITA was up 23.6 per cent compared with the previous year. In seafreight, strong growth and high operational efficiency led to a 32.9 per cent improvement. In airfreight, the operational result rose 8.7 per cent year-on-year despite strong pressure on margins, which Kuehne + Nagel successfully compensated for by cost and process optimisation.

In Rail & Road Logistics, EBITA decreased to CHF 4.5 million due to restructuring costs from the integration of the firms acquired in Germany. The initiation of IT and process standardisation is expected to increase productivity and reduce costs in the current year.

Contract Logistics’ operational result increased by 19.5 per cent, driven by additional business volume in Europe, Canada and the United States combined with productivity increases.

Nacora Insurance Brokers, Kuehne + Nagel’s insurance broker subsidiary, gained market shares worldwide and performed as projected, returning good results.

All Kuehne + Nagel regions reported strong EBITA results for 2005. Asia-Pacific grew 17.6 per cent; Europe 13.2 per cent; and the Americas 26.7 per cent due to the positive performance of contract logistics operations as well as intensified cross-selling activities. The Middle East, Central Asia and Africa region’s EBITA increased by 74 per cent, supported by extensive contracts in the project, oil and energy businesses.

Outlook

Kuehne + Nagel has set ambitious targets for 2006: In sea and airfreight, the company aims to outperform the market, while leveraging effective cost management and continued productivity increases to maintain industry-leading margins in both business fields.

Expansion of European overland operations will continue, with further acquisitions planned in order to optimally utilise the current network.

In Contract Logistics, the focus will be on the rapid integration of ACR Logistics, allowing the extended customer base to quickly benefit from the merger. Systematic cross-selling, particularly in Eastern Europe and Asia, will provide Kuehne + Nagel with additional growth potential.

Targeted investments and development projects will facilitate ongoing positive performance across all regions and business fields.

“Given our strong presence in all key markets worldwide, we are well positioned to continue benefiting from globalisation and growing trade flows”, said Klaus-Michael Kuehne, Executive Chairman of the Board of Directors, Kuehne + Nagel International AG. “The Kuehne + Nagel Group’s considerable business potential and proven logistics capabilities will receive additional momentum from the merger with European contract logistics company ACR. We are confident that we can significantly strengthen and expand our market position again in 2006.”