Panalpina achieves overall volume growth; margin remains under pressure

Apr 21, 2017: Switzerland-based headquartered Panalpina achieved volume increase in Air and Ocean freight in the first quarter of 2017, but the margin remained under pressure. The international freight forwarding and the logistic company reported an EBIT of CHF 16.4 million and a consolidated profit of CHF 12.4 million for Q1 2017.

In the first quarter of 2017, group gross profit decreased 9 percent to CHF 332.7 million, while total operating expenses went down by 7 percent to CHF 305.7 million years on year. Panalpina achieved an EBIT of CHF 16.4 million, a decrease of 32 percent compared to last year’s first quarter. The EBIT-to-gross-profit margin came in at 4.9 percent and the consolidated profit of the group reached CHF 12.4 million.

Stefan Karlen, CEO, Panalpina, said, “In the first three months of the year, we succeeded in outperforming the markets with volume increases of 8 percent in Air Freight and 7 percent in Ocean Freight. As expected, margins remained under pressure, however, they are slowly recovering since we saw an upturn in unit profitability in both Air and Ocean Freight compared to the last quarter of 2016.”

Panalpina’s Air Freight volumes grew 8 percent in the first quarter compared to an estimated market growth of just above 6 percent. Volume growth was driven mainly by the Far East trade lanes. Gross profit per ton decreased 10 percent to CHF 620 year on year but was up versus the last quarter.

Panalpina’s Ocean Freight volumes increased 7 percent year on year while the market grew by an estimated 4 percent. The Transatlantic and Far East trade lanes contributed to Panalpina’s growth.

The exit from more underperforming sites meant that the gross profit of the Group’s Logistics product decreased 16 percent to CHF 82.5 million, but with a strong end to the quarter and further improvements in underlying profitability, EBIT increased from CHF 1.8 million to CHF 2.4 million, resulting in the highest quarterly result recorded to date.

“While the challenging market dynamics are expected to continue throughout 2017, we are well positioned in the market and cautiously optimistic that we can keep up the strong volume growth in Air and Ocean Freight, further gaining market share. In a market environment where rates are currently going up instead of down as last year, we also expect to make progress in yield management. One of our top priorities remains, of course, to restore profitability in Ocean Freight.” Karlen says.