Kuehne + Nagel satisfied with 1st half, predicts logistics slowdown

Swiss freight forwarding and logistics group Kuehne + Nagel International AG today said it managed above-market growth in the first half of 2008, but warned of slower growth rates in the logistics sector for the second half of the year.

In what it described as an increasingly difficult world economic environment, the Schindellegi-based company posted first half earnings of 310 million Swiss francs ($304 million), up 14.8 percent from SFr 270 million in the corresponding period last year.

Kuehne + Nagel's interim earnings before interest and tax (EBIT) increased 12.6 percent to SFr 394 million ($387 million) from SFr 350 million. Turnover rose 7.3 percent to 10.7 billion SFr ($10.5 billion). 

We prepared for any possible economic slowdown in good time, focusing on strict cost management and profitable growth," said Klaus Herms, Kuehne + Nagel's chief executive officer. We are satisfied with the half-year result, which reaffirms the sustainability and stability of our business model even in difficult economic times.

In the company's largest division, sea freight, EBIT increased 12.2 percent to SFr 193 million ($190 million) on a revenue gain of 7.3 percent to SFr 4.86 billion ($4.76 billion). The company said its ocean freight volume increased 7.4 percent in the six months with strong growth in the trades from North America to Europe and Asia. Growth on the Asia to Europe trades, however, slowed. Kuehne + Nagel said the continuing U.S. credit crisis, combined with the rising cost of oil and other commodities, and dampened consumer spending, slowed global container market growth to between 4 percent and 5 percent.

Kuehne + Nagel's half-year air freight EBIT rose 20.9 percent to SFr 104 million ($102 million). Turnover in the division went up 11.7 percent at SFr 1.92 billion ($1.89 billion) after a tonnage gain of 11.4 percent.

For contract logistics, the company posted EBIT of SFr 57 million ($56 million), up 3.6 percent, while revenue improved 4.6 percent to SFr 2.37 billion ($2.32 billion).

EBIT for the company's road and rail logistics division declined 12.5 percent to SFr 57 million ($56 million) although revenue was up 4.6 percent to SFr 1.48 billion ($1.45 billion).

   Kuehne + Nagel's half-year revenue broken down on a regional basis was:

   Europe, SFr 7.21 billion ($7.07 billion), up 6.6 percent.

   Americas, SFr 2.00 billion ($196 billion), up 7.7 percent.

   Asia Pacific, SFr 880 million ($863 million), up 8.2 percent.

   Middle East, Central Asia and Africa, SFr 607 million ($596 million), up 14.7 percent.

   Looking forwards, Kuehne + Nagel's management board said it anticipates slower growth rates in the logistics market for the remainder of the year.

   Due to its global network and comprehensive portfolio of services, the company will nonetheless benefit from globalization and the expected shifts in goods flows. High flexibility, transparent cost structures and a strong financial foundation enable the group to quickly adapt to change and consistently maximize business opportunities, the company said in a statement.