By Dominic Chopping


Kuehne + Nagel has agreed to buy cross-border logistics provider City Zone Express as it looks to strengthen its offering in Asia Pacific to cater to booming e-commerce and high-tech industries in the region.

Financial terms weren't disclosed, but the acquisition will be immediately earnings-accretive and strategically enhance Kuehne + Nagel's cross-border road logistics service offerings in Asia, it said.

Malaysia-based City Zone Express is a subsidiary of Singapore-listed Chasen Holdings and operates in Malaysia, Singapore, Vietnam, Thailand, and China.

The Swiss logistics company also announced earnings Friday, reporting a net profit of 283 million Swiss francs ($320 million) in the final quarter of 2023, down from CHF494 million in the same period a year earlier as turnover fell 35% to CHF5.69 billion.

For the full-year, net profit rose to CHF1.46 billion on turnover of CHF23.85 billion, in line with a company-compiled consensus for CHF1.46 billion and CHF24.02 billion, respectively.

Logistics providers saw earnings surge in 2022 as Covid, Russia's invasion of Ukraine and lockdowns in China strained supply chains and sent freight rates soaring.

Conditions normalized in 2023 though as inflation surged and central banks began aggressively raising interest rates. Stretched supply chains eased and the sea and air freight market quickly swung to overcapacity, pressuring freight rates.

"Kuehne + Nagel closed the financial year 2023 with an overall good performance in a persistently challenging environment," said Chief Executive Stefan Paul. "We adjusted our cost base to market conditions by intensifying restructuring measures in the fourth quarter."

The freight forwarder last year presented a plan to grow average annual earnings before interest and tax by 17% to 19% in the period to 2026, from 2019 levels, while achieving a conversion rate--the ratio of EBIT to gross profit--of 25%-30%.

It reported a conversion rate of 21.7% in 2023 and said it is making "solid progress" towards the 2026 goals.

The company will pay a dividend of CHF10 in 2023, down from the CHF14 payout for 2022.


Write to Dominic Chopping at dominic.chopping@wsj.com


(END) Dow Jones Newswires

03-01-24 0234ET