Kuehne + Nagel International AG - Half Year Results for 2005

During the first six months of 2005 Kuehne + Nagel, the globally operating logistics group, continued to achieve high levels of growth in turnover and profits. Turnover rose by 18.0 per cent to CHF 6,408.5 million, while the operational result (EBITA) increased by 17.8 per cent to CHF 211.2 million. Net earnings at CHF 130.0 million improved by 34.4 per cent in comparison with the same period last year.

Once again Kuehne + Nagel’s global capabilities and its comprehensive range of integrated logistics services proved to be key factors for the company’s growth. In all regions and business units notable gains in market share were achieved.

The business unit Sea & Air Logistics continued its excellent performance and contributed significantly to the results. Turnover increased by 18.7 per cent and the operational result grew by 27.5 per cent compared with the first half of 2004.

With an increase in volumes of 21 per cent, Kuehne + Nagel further expanded its global leadership in seafreight. Growth on virtually all trade lanes was far above the market average. Worth mentioning is Kuehne + Nagel’s performance in the Asia-Europe traffic with volumes up 30 per cent and on the Asia-Latin America routes with freight increases of 46 per cent. The strong organic growth and improved operational efficiencies accounted for the 41.7 per cent higher operational result and expanded EBITA margin (2.7 to 3.2 per cent).

In the first half of the year the global airfreight market was dominated by fierce competition and declining growth. Nevertheless, Kuehne + Nagel was able to generate above average growth rates in this business field as well. Latin America experienced the highest growth rate up 63 per cent; Asia exports increased by 11 per cent. European and North American airfreight operations also performed well. Overall, the company recorded a 13 per cent rise in tonnage, while the market grew only around four per cent. Despite considerable pressure on margins, the operational result was up 8.0 per cent with an EBITA margin at 4.3 per cent.

Kuehne + Nagel’s overland transport activities made further progress. Due to company takeovers in Denmark and Germany transport volumes increased significantly. The level of profitability anticipated at the date of the acquisition of the German Häring Group was not achieved. As a result, an evaluation of the related goodwill was made which led to an impairment charge of CHF 24.7 million.

The Contract Logistics business unit’s growth strategy is being successfully executed: turnover increased by 10.1 per cent in comparison with the same period last year and the operational result advanced by 10.4 per cent. This growth was largely driven by new business wins in Europe and North America. Despite high investments in IT and logistics infrastructure, the EBITA margin at 3.5 per cent remained at last year’s level. Kuehne + Nagel’s standardised warehouse management system provides the company with a competitive edge. The system is currently implemented in 34 countries and connected to the sea and airfreight applications. Contract logistics acitivies
in China made progress; the expansion into the Indian subcontinent commenced.

“Thanks to our global capabilities and operational efficiency we were able to expand market shares and increase our high level of profitability in the first half of 2005”, commented Klaus Herms, CEO of Kuehne + Nagel International AG. “For the second half of the year we expect the strong performance and the positive development of results to continue.”