Panalpina grows ahead of market and improves profitability in first quarter

"We had a decent start into 2014," says Panalpina CEO Peter Ulber. "In the first three months of the year, Air and Ocean Freight showed continued growth ahead of the market, and in Logistics we made progress in reducing the losses. Group EBIT and EBIT-to-gross profit margin increased both year-on-year and quarter-on-quarter."

Panalpina Group: Results for the first quarter of 2014

First Quarter Results 2014 - Consolidated Financial Statements

First Quarter Results 2014 - Investor Presentation

EBIT increases by almost a third

Group gross profit increased 5% to CHF 384.3 million, reaching the highest first quarter level since the financial crisis. Total operating expenses were up 3% year-on-year but down 5% quarter-on-quarter on a like-for-like basis. Panalpina achieved an EBIT of CHF 24.5 million, an increase of 32% compared to last year's first quarter. The year-on-year EBIT increase was a combination of leveraging growth, managing costs and further improving productivity. The EBIT-to-gross-profit margin increased to 6.4%, up from 5.1% a year ago.

Air Freight

Panalpina's Air Freight volumes grew 6% in the first quarter, ahead of the market (+4%). Gross profit per ton decreased 1% to CHF 754 (Q1 2013: CHF 763). As a result, Air Freight gross profit reached CHF 153.7 million (Q1 2013: CHF 146.4 million). Air Freight achieved an EBIT of CHF 26.0 million (Q1 2013: CHF 22.2 million). The EBIT-to-gross-profit margin for the first quarter increased to 16.9% (Q1 2013: 15.2%).

Ocean Freight

Panalpina's Ocean Freight volumes also grew 6% year-on-year, while the market only grew 3%. Volumes out of Asia, particularly to North America and Europe, slowed down. Gross profit per TEU of Ocean Freight decreased 1% to CHF 333 (Q1 2013: CHF 338), which resulted in a gross profit of CHF 122.7 million (Q1 2013: CHF 117.3 million). Ocean Freight posted an EBIT of CHF 3.9 million, CHF 1.0 million less in comparison to last year's quarter, but CHF 2.7 million more in comparison to the preceding quarter. The EBIT-to-gross profit margin decreased to 3.2% in the first quarter (Q1 2013: 4.2%).

Logistics

The Group's Logistics product recorded gross profit growth of 5% to CHF 107.9 million (Q1 2013: CHF 102.1 million). The loss on EBIT level decreased to CHF 5.4 million (Q1 2013: CHF 8.6 million), which was primarily a result of reduced losses in overland activities.

Outlook

"In the context of difficult market conditions, the results for the first quarter are very encouraging. Our systematic restructuring activities to turn around the company's loss-making operations are ongoing and on track, but these activities will continue to influence the financial results in the short term," says Ulber. Panalpina's outlook for the air and ocean freight markets remains unchanged. The company expects the air freight market to grow by 2 to 3% and the ocean freight market by 4 to 5% in 2014.

-ENDS-