K+N's first-half earnings and net profit decline on coronavirus crisis
SWISS forwarding giant Kuehne + Nagel has posted sharp drops in revenue, earnings, and volumes in the first half of the year brought about by the Covid-19 shutdowns of non-essential retailers and manufacturing across key markets decimated consumer demand
SWISS forwarding giant Kuehne + Nagel has posted sharp drops in revenue, earnings, and volumes in the first half of the year brought about by the Covid-19 shutdowns of non-essential retailers and manufacturing across key markets decimated consumer demand.
Kuehne + Nagel is the first major forwarder to release its half yearly results with red numbers dominating its balance sheet.
The company's first half revenue fell almost US$1 billion to $10.4 billion, a drop of 7.5 per cent year over year. Earnings before interest and taxes (EBIT) was down 18 per cent to $447 million, while net earnings of $330 million fell by almost 20 per cent compared to the first half of 2019.
Detlef Trefzger, CEO of Kuehne + Nagel International, said the right measures to manage the impact of the coronavirus were taken early, leading to cost savings and the capturing of market share.
'The crisis triggered by the coronavirus pandemic, which led to a lockdown in most countries, had profound and sudden negative impacts on international trade,' Mr Trefzger said in the statement, adding he expected 'major uncertainties' to continue through the rest of the second half.
Despite declaring its second quarter performance 'a good result' considering the coronavirus-driven global lockdowns, the forwarder's air and ocean segments both reported sharp declines in volume.
Ocean freight volume fell by 132,000 TEU in the second quarter to 1.1 million TEU, a drop of almost 12 per cent year over year, and air cargo volume was down 22 per cent to 315,000 tonnes.
While the forwarder's ocean freight segment reported a 12 per cent second quarter revenue loss of $1.77 billion, and an EBIT loss of 28.5 per cent, air cargo revenue soared 15 per cent compared to the same quarter last year to reach $1.46 billion. Air cargo EBIT was up 17 per cent year over year.
'A high demand for crisis goods in the second quarter 2020 led to a short-term, beneficial shift in the product mix,' the company said. Its air logistics business unit purchased charter capacity for customers on a targeted basis as belly capacity on passenger flights was pulled from service during the second quarter.
'These factors, combined with active cost management, produced attractive profitability along with expanded market share,' the company said. 'With the gradual resumption of passenger services since June, a slight normalisation of the general market conditions is visible.'
In its road logistics segment, the forwarder reported a significant decline in order volume during April and May, but since the beginning of June has seen demand for domestic European transport improving to pre-crisis levels. In North America, demand for all product segments - with the exception of pharma and e-commerce - was significantly lower than the previous year.
In contract logistics, the heavy reduction in demand in the second quarter was mitigated by stringent cost management and strong demand for essential goods and e-commerce, which now account for around half of the contract logistics portfolio, reports IHS Media.