Panalpina’s EBIT on path to recovery in 2013

International freight forwarding and logistics company Panalpina made steady progress in 2013. The Panalpina Group reported an EBIT of CHF 48 million - or CHF 108 million when adjusted for non-recurring items, which is more than double the 2012 result. Panalpina outperformed the market in Air and Ocean Freight.

"We recovered from 2012 and gained market share in a low growth environment in 2013," says Panalpina CEO Peter Ulber, who has been at the helm of the company since June. "I am happy to state that we outperformed the market in both Air and Ocean Freight. But there is still a lot of room for profitability improvements, especially in Logistics and Ocean Freight."

Panalpina Group: Results for the Full Year 2013 and the fourth quarter

Personnel expenses and income tax expenses in 2012 have been restated due to retroactive application of IAS 19 revised.

* Proposed to the Annual General Meeting

Full Year Results 2013 - Consolidated Financial Statements

Full Year Results 2013 - Investor Presentation

EBIT (adjusted) more than doubled

In 2013, Panalpina's net forwarding revenue increased 2% to CHF 6,757.6 million (2012: CHF 6,616.6 million). Group gross profit increased 7% to CHF 1,561.0 million (2012: CHF 1,465.0 million), driven by strong growth in Logistics, Ocean Freight, and its thriving oil & gas and projects business.

Various provisions for a legal settlement in the U.S. and fines totalling CHF 40.9 million (2012: CHF 59.2 million) substantially impacted the Group's financial results. Together with a fourth quarter impairment of CHF 19.1 million (2012: CHF 29.6 million) the total of non-recurring charges in 2013 amounted to CHF 60.0 million (2012: CHF 88.8 million). Operating expenses before these non-recurring items increased 2% to CHF 1,400.2 million (2012: CHF 1,371.5 million), mainly as a result of the expansion of Logistics operations, personnel and IT investments.

Panalpina achieved an adjusted EBIT of CHF 108.0 million for the whole year, up from an adjusted CHF 49.3 million in 2012. The adjusted EBIT-to-gross profit margin increased to 6.9%, up from 3.4% in 2012.

Air Freight

In a market that only expanded by approximately 1% in 2013, Panalpina's Air Freight volumes grew 3%. Panalpina transported 825,100 tons of air cargo last year (2012: 801,400 tons). Gross profit per ton decreased 2% to CHF 765 (2012: CHF 784) as a result of rate increases particularly during peak season of the fourth quarter. This led to a slight expansion of Air Freight gross profit to CHF 631.4 million (2012: 628.1 million), supported by double-digit gross profit growth of the oil & gas and projects business as well as the automotive and manufacturing business. On an operating profit level, Air Freight achieved an adjusted EBIT of CHF 119.3 million (2012: CHF 79.8 million). The adjusted EBIT-to-gross profit margin in 2013 increased to 18.9% (2012: 12.7%), thanks to cost containment and improved productivity.

Ocean Freight

Panalpina's Ocean Freight volumes grew 8% year-on-year, while the market grew an estimated 3%. The company transported 1,495,300 TEUs (twenty-foot equivalent units) in 2013 (2012: 1,388,300 TEUs). Gross profit per TEU of Ocean Freight remained nearly stable at CHF 329 (2012: CHF 331), which resulted in agross profit increase of 7% to CHF 491.9 million (2012: CHF 459.8 million). Again, the oil & gas and projects business showed a very dynamic development with strong double-digit gross profit growth. Ocean Freight posted an adjusted EBIT of CHF 28.0 million in 2013 (2012: CHF 8.9 million). The adjusted EBIT-to-gross profit margin increased to 5.7% in 2013 (2012: 1.9%).

Logistics

The Group's Logistics product recorded strong gross profit growth of 16% to CHF 437.7 million in 2013 (2012: CHF 377.1 million). Panalpina further expanded its warehousing and distribution activities including Value-Added Services (VAS), particularly for the technology and fashion industries. Logistics ended the year with an EBIT loss of CHF 39.3 million (2012: loss of CHF 39.4 million), caused primarily by a number of loss-making facilities and unprofitable road activities.

Dividend

In light of the healthy net cash position, the board of directors is going to propose a dividend payment of CHF 2.20 per share to the Annual General Meeting on May 9, 2014. This is equivalent to a dividend yield of 1.5% (based on 2013 year-end share price).

Outlook

"In 2014 we will focus on stabilizing our performance in Air Freight and improving productivity and operating margin in Ocean Freight," says Peter Ulber. In Logistics, the company's top priority is to turn around loss-making facilities. It will also exit from overland capacity commitments while still developing Value-Added Services. "We see Logistics as an important differentiator to complement our end-to-end offering," adds Ulber. Another priority is to further expand the oil & gas and projects business, where Panalpina traditionally has strong expertise.

Panalpina expects the air freight market to grow by 2 to 3% and the ocean freight market by 4 to 5% in 2014. The company aims to outperform the market in all segments.

-ENDS-