But 'challenging market environment' impacts air and ocean freight performance
Panalpina improved its profitability in the first quarter of the year but toughening market conditions impacted the performance of its air and ocean freight divisions during the period.
In the first three months of 2019, the Switzerland-based freight forwarding and logistics company, which is poised to merge with Danish counterpart, DSV, reported earnings before interest and tax (EBIT) of CHF 28.1 million compared to CHF 24.4 million a year earlier and a consolidated profit of CHF 19.2 million (YTD 2018: CHF 16.6 million). The EBIT-to-gross-profit margin stood at 7.9%, up from 6.6% in 2018.
“In the first quarter of this year, Panalpina generated 15% more EBIT and profit than in the same period of last year,” noted Panalpina CEO Stefan Karlen. “We improved profitability despite a challenging market environment and during a time when considerable management resources were absorbed by the M&A topic. This demonstrates the underlying quality and strength of our organization.”
Panalpina’s Air Freight volumes increased 8% in Q1 2019 but growth was reduced to 2% when the impact of acquisitions was excluded. Compared to the same period of last year, gross profit per tonne decreased 10% to CHF 666, while overall gross profit declined to CHF 173.1 million from CHF 177.8 million). EBIT fell from CHF 26.9 million to CHF 24.9 million.
As a result, the air freight business’s EBIT-to-gross-profit margin, or ‘conversion rate’ came in at 14.4% compared to 15.1% a year before.
Meanwhile, Panalpina’s Ocean Freight volumes decreased 3% year-on-year and gross profit per TEU decreased 2% to CHF 296, bringing gross profit to CHF 102.9 million compared to CHF 108.9 million a year earlier. For the first quarter of 2019, Ocean Freight recorded an EBIT of CHF 0.3 million, “still positive due to strong cost control,” against a loss of CHF 5.8 million in Q1 2018.