K+N's volume up in all biz units; EMEA records 8.1% gross profit

Feb 27, 2019: Kuehne Nagel (K+N) International AG, one of the leading logistics service providers, has declared an increase of 4.3 percent, i.e. CHF 772 million, in its net profit for the year 2018.

The group achieved a net turnover of CHF 20,774 million in 2018, an increase of 11.7 percent compared to the previous year. This increase comes from the growth in volume in all business units. Net turnover increased by 17.0 percent in the Americas (North, Central, and South America), by 13.5 percent in Asia-Pacific and by 9.3 percent in EMEA (Europe, Near/Middle East, Central Asia, and Africa).

Gross profit improved by 14.1 percent in Asia-Pacific, by 13.6 percent in the Americas and by 8.1 percent in EMEA.

Commenting on the group's annual result, Detlef Trefzger, CEO, K+N International AG, said, "Despite the market weakening at the end of the year, we succeeded in increasing our net turnover, gross profit and earnings before interest and taxes (EBIT) once again. By introducing additional digital platforms, with new highly specialised solutions and targeted acquisitions, we reached important milestones last year and will continue to pursue our journey. In 2019, we aim at growing twice as fast as the market and improving our results further, complemented with selected acquisitions to our portfolio."

With a 7.7 percent growth in volume, K+N gained again market share in sea freight and strengthened its position globally. The company handled 4.7 million standard containers (TEU) last year, representing an increase of around 335,000 TEU. Significant new business was won with KN ESP, a new digital supplier management system for key accounts introduced in early 2018. The company also launched another new digital platform, Sea Explorer - to provide customers with detailed comparisons for carrier services. Strong growth was recorded in the Asia-Europe trade and in US imports, particularly from Asia.

In addition, intra-Asian trade lanes grew again last year. With three alliances and seven carriers in the market, the supply of capacity impacted margins which varied substantially, depending on the region, trade lane and product. While the margins in European exports were under considerable pressure, those in Asia-Europe trade were growing. In this context, K+N's sea freight business achieved a solid EBIT that grew by 1.0 percent compared to the previous year.

Airfreight at K+N increased its tonnage by 11.0 percent to 1.7 million tonnes, thereby achieving significantly higher growth than the overall market. Industry-specific solutions for the pharma & healthcare and aviation industries played an important role in this growth. K+N pursues an active M&A strategy and acquired Quick International Courier, a company in time-critical transport and logistics solutions. Due to this strong growth in volume, consistent cost control, and further productivity gains, EBIT grew by 13.4 percent in airfreight.

K+N's excellent results in overland continued in 2018, with the company achieving significant increases in net turnover, gross profit, and EBIT. Net turnover grew by 13.1 percent and gross profit by 14.3 percent. EBIT improved by 55.1 percent compared with the previous year. Business in European groupage and less-than-truckload shipments were the primary growth drivers, as well as intermodal shipments and transport management for major customers in North America. Industry-specific solutions for customers from the pharma and healthcare industry played a key role in this success. K+N continues to expand on its digital competence and aims at systematically increasing the number of automated shipments to further raise efficiency.

In contract logistics, K+N increased net turnover by 9.0 percent and gross profit by 8.8 percent. The company grew significantly in the USA and Asia. Growth rates of more than 40 percent were achieved in e-commerce fulfilment. The EBIT remained below last year's figure, down by 14.3 percent, due to the review of the project portfolio and investments for a new global warehouse management system, used for the operational control of the group's worldwide fulfilment centres. Two acquisitions strengthened the company's position as a leading international logistics provider for China's automotive industry and expanded its e-commerce offering in Indonesia. K+N managed 11.6 million square metres of warehouse and logistics space for its customers.

Earnings before interest, tax, depreciation, amortisation, and impairment of property, plant and equipment, goodwill and other intangible assets (EBITDA) increased by 5.1 percent to CHF 1,209 million compared to the previous year. EMEA generated the largest EBITDA contribution with CHF 693 million (57.3 percent), followed by the Americas with CHF 263 million (21.8 percent) and Asia-Pacific with CHF 253 million (20.9 percent).

In 2018, EBIT improved by 5.3 percent to CHF 987 million. The group's EBIT margin was at 4.8 percent. EMEA contributed CHF 545 million (55.2 percent) to the group's EBIT, followed by Asia-Pacific with a contribution of CHF 232 million (23.5 percent) and the Americas with CHF 210 million (21.3 percent).

Jorg Wolle, chairman of the board of directors of K+N International AG, said, "The K+N Group's annual result demonstrates once again the company's performance. In 2018, we expanded our position as a globally leading logistics provider and further improved our result. In this context, the Board of Directors is looking with confidence to the 2019 financial year and ahead. In the medium and long term, the fundamental, all-encompassing transformation processes taking place in all areas of the global economy will continue to represent significant opportunities for Kuehne Nagel going forward."