Kuehne & Nagel Pays Shareholders $798 Million in Dividends

Kuehne & Nagel International AG proposed a special dividend to shareholders after the world’s biggest sea-freight forwarder shut loss-making logistics offices to help boost earnings.

The Swiss logistics company will pay shareholders 3.85 francs a share in ordinary dividend, compared with 3.50 francs a year earlier, and proposed an extraordinary payment of 2 francs a share, for a total of 702 million francs ($798 million), the company said in a statement today.

Subdued economic activity is weighing on shipping companies as eurozone countries struggle in the aftermath of the longest recession since the currency was introduced, and growth in China and India slows. Kuehne’s contract-logistics unit closed 40 locations to focus on profitable regions, and the company is trying to turn around its road- and rail-logistics business.

“By concentrating on selective growth in seafreight, we succeeded in keeping margins stable despite high volatility of rates,” Chief Executive Officer Detlef Trefzger said in the statement.

Earnings before interest and taxes rose 20 percent last year to 761 million francs, Schindellegi-based Kuehne & Nagel said. The average analyst estimate collected by Bloomberg was for 763.8 million francs in earnings.

The stock fell 3.7 percent at 9:37 a.m. in Zurich to 120.9 francs. Kuehne & Nagel’s shares have advanced 3.3 percent this year for a market value of 14.5 billion francs.

Faster Growth

Net sales rose 0.8 percent to 20.9 billion francs. Sea-freight volumes rose 3 percent, with air freight volumes increasing 3.8 percent. Sales at the road and rail unit fell 3 percent, while rising 5 percent at the contract logistics unit.

Kuehne & Nagel forecast that company air and sea-freight volumes will rise 50 percent faster than the market this year. It expects global sea freight volumes to advance 2 percent to 4 percent, while industrywide air-freight volumes will increase by 1 percent to 3 percent. It plans to grow its contract logistics unit at double the estimated market pace of between 2 percent and 3 percent. Its road and rail unit, which has been loss-making since at least 2005, will keep pace with the market growth at 1 percent to 3 percent, the company said.

DSV A/S said Feb. 6 industrywide sea freight volumes grew 2 percent to 3 percent in 2013, and forecast growth may be as high as 5 percent this year. A.P. Moeller-Maersk A/S’s container-shipping line, the world’s largest, on Feb. 27 forecast global demand for seaborne container transportation to increase by 4 percent to 5 percent this year, while excess capacity will likely continue to depress freight rates.

Kuehne & Nagel today proposed former Roland Berger Strategy Consultants CEO Martin Wittig to join its board of directors, alongside Chief Financial Officer Gerard van Kesteren, who will be succeeded in his current position on July 1 by Markus Blanka-Graff.

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