The main contributor to the Group’s result remains the business unit Seafreight, whereby in 2017 major profitability improvements were generated in the Airfreight, Overland, and Contract Logistics business units.
Seafreight volumes increased by 7.5 per cent to 4,355,000 TEUs exceeding market growth estimated at 4 to 5 per cent and further solidified the Group’s global leadership in Seafreight. Services for temperature controlled cargo in reefer containers and the Less-than-Container Load (LCL) business have significantly contributed to the growth. Customers from the pharma and healthcare industry use Kuehne + Nagel to handle temperature-sensitive products. The US import from export to Europe trades contributed to the strong volume growth. However, the effects of the continuing consolidation in the shipping industry and margin pressure from competition impacted Kuehne + Nagel negatively. Despite further productivity increases, EBIT in 2017 declined by 7.0 per cent compared to the previous year, while the ratio of EBIT to gross profit (conversion rate) declined slightly to 29.2 per cent (2016: 31.4 per cent) due to difficult market conditions, but is still amongst the leading levels in the industry.
It remains the Group’s target to achieve growth rates that are substantially above market growth. Simultaneously the Group’s focus is on the Sea and Airfreight profitability and continuous efficiency gains through productivity improvements. The Group has a long-standing track record in achieving year-over-year cost per unit improvements.
|EBIT in per cent of gross profit (conversion rate)||29.2||31.4||33.2|
|Number of operating staff||9,543||9,154||8,792|
Airfreight increased volumes by 20.4 per cent to 1,570,000 tons, thus strengthening the Group’s position as the number two global airfreight provider. Acquisitions, including Commodity Forwarders Inc. (CFI), a company based in Los Angeles (USA), which was consolidated as of October 2, 2017, contributed 2.3 per cent to the year-to-date volume growth. The focus on industry-specific Airfreight services like KN EngineChain, a specialised service for production, spare parts, and maintenance of aircraft engines for the Aerospace industry has significantly contributed to this success. Substantial new business has been gained through Kuehne + Nagel‘s state of the art services for temperature-sensitive goods, pharmaceutical and perishables products. Profitability in 2017 remained at an industry leading 30.2 per cent (2016: 30.9 per cent) EBIT-to-gross profit margin as volume growth more than compensated margin dilutions. EBIT improved by 5.0 per cent compared to the previous year.
The Group has developed in various strategic programmes world class expertise in industry and product-specific supply chain services. Organic growth in areas such as perishables, pharma and aerospace logistics, together with selected bolt-on acquisitions continue to ascertain the Group’s leading position.
|EBIT in per cent of gross profit (conversion rate)||30.2||30.9||29.3|
|Number of operating staff||6,693||5,734||5,563|
Overland increased its net turnover in 2017 by 7.6 per cent with strong performance of its land transport activities within Europe. The key performance indicator EBITDA to net turnover margin was with 3.0 per cent above the previous year’s 2.4 per cent.
EBIT increased to CHF 49 million (2016: CHF 28 million). With the expansion of services in Overland to industry-specific solutions, Overland has significantly contributed to the success of the Group’s integrated logistics offering.
|EBIT in per cent of gross profit (conversion rate)||5.1||3.1||0.8|
|Number of operating staff||8,040||7,894||8,186|
The focus on specialised end-to-end solutions for industries such as automotive, high-tech, consumer goods, aerospace, pharmaceuticals, healthcare, and e-commerce fulfilment led to numerous new customer contracts. This resulted for 2017 in a (net of currency impact) net turnover growth of 8.0 per cent. More than 100 new logistics projects were implemented for customers in 2017, enabling the company to manage 10.6 million square meters of warehouse and logistics space worldwide. Continuous process improvements in 2017 led to an increase of the EBITDA to net turnover margin to 6.0 per cent versus 5.8 per cent in 2016 and an increase of EBIT by 9.5 per cent.
Kuehne + Nagel further strengthened its global leading position in the field of integrated logistics with increased contract volumes and improved profitability. The Group offers specialised end-to-end supply chain management solutions, which are managed from the Logistics Control Towers and performed with other business units, supporting customers to improve their value chain. Integrated Logistics experts develop, implement and manage solutions that streamline the supply chain to make it lean, agile and demand-driven.
|EBIT in per cent of gross profit (conversion rate)||4.4||4.5||3.8|
|Number of operating staff||39,957||35,866||33,925|
|Warehousing and logistics space in sqm||10,631,779||10,021,688||9,556,477|
|Idle space in sqm||283,690||364,035||335,453|
|Idle space in per cent||2.7||3.6||3.5|