Kuehne + Nagel Q3 profit up 24pc to US$293m on the back of revenue slide

SWISS-BASED forwarder Kuehne + Nagel posted a net profit of US$293 million in the third quarter, an increase of 24 per cent compared to the same period last year

26 October 2020 - 19:00
SWISS-BASED forwarder Kuehne + Nagel posted a net profit of US$293 million in the third quarter, an increase of 24 per cent compared to the same period last year.

Revenue during the period slipped 4 per cent to $5.54 billion. Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 27 per cent from a year ago to $660 million.

However, the solid financial showing in Q3 was not quite enough to completely erase the damage caused by Covid-19 in the first half of the year. Revenue in the first nine months fell 6 per cent to $16.3 billion, and although EBITDA grew 4.3 per cent to $1.54 billion, net profit was down 3.8 per cent to $634 million.

CFO Markus Blanka-Graff said the turnaround in sea freight volume was driven by recovering demand from small- to medium-sized customers and an increase in Asian imports by the major markets.

'We see a sequential recovery month by month, especially in the consumer products in Europe, Latin America, and North America, such as sporting equipment, garden and outdoor equipment, that are driving sea freight volume,' he said. Rising demand in the automotive and perishables business was behind the increase in air freight volume.

But Mr Blanka-Graaf pointed out that despite the strong improvement over the coronavirus-hit second quarter, the third quarter sea freight volume of 1.21 million TEU was still 5.1 per cent below the same quarter of last year, and the nine-month volume of 3.2 million TEU was down 7.7 per cent year over year. The improved pricing power was evident in the EBIT of $124 per TEU that was the highest-ever quarterly EBIT seen in the company's ocean freight division, reports IHS Media.

In air freight, Q3 volume of 354,000 tonnes was down almost 13 per cent year over year, and the 1.04 million tonnes carried during the first nine months was a decline of almost 15 per cent.

Kuehne + Nagel is preparing for any Covid-19 vaccine distribution next year. In September, the air logistics division opened new pharma hubs in Brussels and Johannesburg with direct tarmac access providing faster handling for temperature-sensitive cargo.

An improving market environment in the third quarter also benefited the road logistics business.

In an earnings call with analysts, CEO Detlef Trefzger highlighted the high levels of uncertainty that were prevalent in any outlook, driven by pandemic-related regional lockdowns and continuing restrictions on business and leisure travel that have affected consumption patterns and transport volume.

'We have most likely in 2020 seen the worst of the market situation,' Mr Trefzger said. 'But our outlook is limited to six to eight weeks. At the moment, as at the end of quarter three, we don't see any change in the momentum that we saw in September, but that is good for up to six weeks and not longer.'

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