Kuehne & Nagel First-Quarter Profit Rose as Cost Cuts Took HoldRichard Weiss
Kuehne & Nagel International AG, the world’s biggest sea-freight forwarder, said first-quarter profit rose as cost cuts took hold and European shipping gained.
Earnings before interest and taxes advanced 12 percent to 190 million Swiss francs ($217 million), Schindellegi, Switzerland-based Kuehne & Nagel said in a statement today. The average analyst estimate collected by Bloomberg was for 192 million francs. Sales fell 1.3 percent percent to 4.13 billion francs, with net income rising 12 percent to 150 million francs.
Subdued economic activity is weighing on shipping companies as Europe struggles in the aftermath of the longest recession since the currency was introduced, while 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 overland business.
“In a slightly recovered market environment all our business units performed well,” Chief Executive Officer Detlef Trefzger said in the statement. “The cost measures introduced one year ago and active margin management have been effective. Our strategy remains unchanged: we will continue to focus on profitable growth.”
Sea-freight volumes rose 6.9 percent, with air freight volumes increasing 1.4 percent. Sales at the road and rail unit rose 6.9 percent, while rising 1.7 percent at the contract logistics unit, both adjusted for currency swings. Starting this quarter, the sea freight unit also contains the insurance broker unit, while the company’s real estate operations are reported within the contract logistics business.
Kuehne & Nagel’s shares have returned 20 percent in a year for a market value of 14.7 billion francs
Kuehne & Nagel reiterated a forecast that the company’s air and sea-freight volumes will rise 50 percent faster than the market this year. It expects global sea freight volumes to advance 3 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 unprofitable on an annual basis since at least 2005, will keep pace with the market growth at 1 percent to 3 percent, the company said.