Panalpina delivers stable profitability in first quarter

International freight forwarding and logistics company Panalpina increased its operating result and profit in the first quarter of 2015. Consolidated profit increased 10% to CHF 19.6 million while EBIT increased 3% (adjusted at constant currency rates: +12%) to CHF 25.3 million, helped by a positive quarter in Logistics. Year-on-year, EBIT and conversion rate increased in Ocean Freight as volumes grew by 5% but decreased in Air Freight where volumes only grew slightly by 1%.

“In the first three months of the year, earnings were up, despite headwinds from a strong Swiss franc and a slowdown in volume growth in Air Freight,” says Panalpina CEO Peter Ulber. “Group EBIT and EBIT-to-gross-profit margin increased both year-on-year and quarter-on-quarter. Slightly better results in Ocean Freight and profitability in Logistics contributed to a decent first quarter.”

Panalpina Group: Results for the first quarter of 2015

EBIT impacted by currencies

Group gross profit went down 3% (currency adjusted: +2%) to CHF 371.8 million, while total operating expenses decreased by 4% (adjusted: +2%) year-on-year. Panalpina achieved an EBIT of CHF 25.3 million, an increase of 3% (adjusted: +12%) compared to last year’s first quarter. The EBIT-to-gross-profit margin increased to 6.8% – up from 6.4% a year ago.

Air Freight

Panalpina’s Air Freight volumes grew 1% in the first quarter, against an estimated market growth of 3 to 4%, mainly caused by lower volumes in the automotive sector. Gross profit per ton decreased 4% to CHF 722 (Q1 2014: CHF 754); as a result, gross profit reached CHF 148.0 million (Q1 2014: CHF 153.7 million). Air Freight achieved an EBIT of CHF 19.6 million (Q1 2014: CHF 26.0 million), and the EBIT-to-gross-profit margin for the first quarter decreased to 13.2% (Q1 2014: 16.9%).

Ocean Freight

Supported by high-volume contracts, Panalpina’s Ocean Freight volumes grew 5% year-on-year – above an estimated market growth of 3%. Gross profit per TEU decreased 8% to CHF 308 (Q1 2014: CHF 333) but was up sequentially (Q4 2014: CHF 297), resulting in a gross profit of CHF 119.1 million (Q1 2014: CHF 122.7 million). Ocean Freight posted an EBIT of CHF 4.5 million, compared to CHF 3.9 million the year before, and the EBIT-to-gross profit margin increased to 3.8% in the first quarter (Q1 2014: 3.2%).

Logistics

The company’s exit from underperforming sites meant that the gross profit of the Group’s Logistics product decreased 3% to CHF 104.7 million (Q1 2014: CHF 107.8 million), but EBIT turned positive with a profit of CHF 1.2 million for the first quarter of 2015 (Q1 2014: negative EBIT of CHF 5.5 million).

Outlook

“With the economic environment weaker than expected and uncertainties around the development of the oil price, the market is difficult to read,” Ulber says. “All the more, we will focus on strategy execution as we transform our business. Overall, we remain cautiously optimistic and expect to grow in line with the market in air freight and outperform the market in ocean freight.”