The international logistics company Panalpina recently published its results for the first semester of the year, highlighting a robust growth in air and ocean freight.
The company said that higher freight rates and margin pressure is continuously changing the market environment, which led to the increase of Panalpina’ EBIT from 34.7 million to 42 million, and a consolidated profit from CHF 21.8 million to CHF 29.9 million for January to June 2017.
“Thanks to strict cost management we improved EBIT quarter-on-quarter in the first half-year of 2017 and restored profitability in Ocean Freight in the second quarter,” says Panalpina CEO Stefan Karlen. “With the successful implementation of our new IT system in the key market Germany, we also gained further momentum in our operations transformation program.
Panalpina Group: Results for the first half of 2017
The group gross profit decreased 9%, from 736.3 million in 2016 to 673.1 million in the first half of 2017. At the same time, operating expenses fell 6% to 609.8 million.
Reported EBIT reached CHF 42.0 million compared to CHF 34.7 million a year before (adjusted HY 2016: CHF 60.8 million) and the EBIT-to-gross-profit margin stood at 6.2%, up from 4.7% (adjusted HY 2016: 8.3%) last year. The reported consolidated profit increased from CHF 21.8 million (adjusted HY 2016: CHF 47.9) to CHF 29.9 million.
Air freight volumes increased 7% in the first half of 2017, as the demand for this services pushed up rates. The gross profit overall resulted in 294.6 million, compared to 304.5 million in 2016. Reported EBIT in Air Freight increased from CHF 33.1 million to CHF 39.1 million.
In Ocean Freight, Panalpina’s volumes in the first half-year increased 5% year-on-year, which was above an estimated market growth of about 4%. However, gross profit per TEU decreased 12% to CHF 283, resulting in a gross profit overall of CHF 214.6 million.
The group’s Logistics gross profit decreased 18% to CHF 163.9 million in the first half-year, but profitability increased further in the meantime: Logistics posted a reported EBIT of CHF 5.4 million for the first six months of 2017, compared to CHF 0.3 million for the same period of last year.
Panalpina CEO said the company is confident that the profitability levels will improve, but will keep controlling expenses: “We expect ocean carriers and airlines to be much more disciplined than in previous years in managing transport capacity and sustaining freight rates,” says Karlen. “While we are confident that we can improve unit profitability in Ocean Freight in the second half of the year, unit profitability in Air Freight will remain under pressure. We will therefore concentrate on what we can influence directly: controlling cost very effectively and pushing ahead with our operations transformation program.”