Geodis faces challenges outside home market

French logistics provider Geodis, which recently acquired the freight forwarding operation from TNT (Wilson Logistics), has reported its first half results. The acquisition was largely responsible for a 22% jump in sales after the freight forwarder's revenues were consolidated for the first time. On a like-for-like basis, there was a more subdued growth of 4.1%.

Overall, the results were patchy. Revenue in France expanded by a robust 5.9%, led by steady growth in Groupage (LTL) and Freight Forwarding volumes. Revenue in Asia rose 14.3% on a like-for-like basis. In Europe (outside of France), revenue decreased by 0.7%, reflecting declines in Benelux and the United Kingdom. This was due to lower distribution volumes for certain high tech customers, which were only partly offset by advances in Germany, Eastern Europe and Italy.

First-half 2007 consolidated operating profit amounted to €44.5 million, after deducting most of the Wilson integration costs. Excluding these costs recurring operating profit was up 10.4% at €58.6 million compared with €53.1 million in first-half 2006.

Operations in Europe (excluding France) generated an operating loss of €4.2 million, compared with a €0.5 million loss in first-half 2006. The deterioration primarily concerned Spain, which ended the period with an operating loss of €6.2 million compared with losses of €3.4 million in first-half 2006 and €10.2 million in the second half, due to the ongoing problems faced by the Groupage (LTL) network and to the cost of management changes.

Geodis has stated that it recognizes the need to turn around its loss-making businesses, particularly domestic groupage operations in Europe. Although property sales this year should ensure that these 'recovery' plans have no material impact on the company, there is no doubt that Geodis' European operations could prove a drag on its future prospects.