Panalpina reports a successful 2011
Mar 7, 2012
The Panalpina Group can look back on a successful 2011. The provider of supply chain solutions further expanded its profit margins and achieved a consolidated profit of CHF 127 million. Currency adjusted, gross profit increased by 12% year-on-year, supported by organic growth across all regions and product divisions. The EBITDA-to-gross profit margin increased to 14.4%. The Group also generated a strong free cash flow of CHF 153 million before money market investments and acquisitions. It plans to distribute a dividend of CHF 2.00 as well as a nominal value payback of CHF 1.90 per share.
“We’ve made very good progress in 2011,” said CEO Monika Ribar. “It was a successful year where we achieved a lot. We enhanced our customer portfolio, we strengthened our product divisions with key hires and innovations, we made two acquisitions and we also expanded our network organically, particularly in emerging markets. On the volume side we did not reach all of our goals.”
Consolidated profit of CHF 127 million
Net forwarding revenue in 2011 experienced the strongest negative currency impact ever. It was
down by 9% to CHF 6,500 million compared to CHF 7,164 million in 2010 (+2% currency adjusted). The figures also reflect the low freight rates prevailing in the market in 2011. Panalpina achieved a consolidated profit of CHF 127 million. In 2010, various non-recurring charges had resulted in a Group loss of CHF 26 million.
Panalpina Group: Results for the Full Year 2011 and the fourth quarter
|(CHF million)||2011||2010||Q4 2011||Q4 2010|
|Net forwarding revenue||6,499.6||7,164.2||1,647.9||1,808.9|
Double-digit organic gross profit growth
All regions and product divisions recorded an organic gross profit increase. Gross profit came in at CHF 1,477 million despite a declining air freight market and falling rates. Currency adjusted, gross profit was up 12% year-on-year. North America and Latin America recorded the strongest gross profit increase in 2011 (both +19% currency adjusted), closely followed by Asia Pacific (+18% currency adjusted) which recorded the highest ever full year gross profit (CHF 313 million). The EMEA region felt the difficult economic environment in Europe. Currency adjusted, the region’s gross profit increased by 6% for the full year 2011. Asia Pacific now weighs in with 21% of Panalpina’s gross profit (EMEA: 50%). Full year gross profit growth in the product divisions was led by Air Freight, which was mainly driven by strong yields in a declining market. Yield management also resulted in a rise of the Group’s gross profit margin to 22.7% in 2011 (20.7% in 2010).
Increased unit profitability in Air Freight and record volumes in Ocean Freight
In Ocean Freight, volumes reached a new record in 2011. The growth of 6% was in line with the market. Panalpina transported 1,310,000 TEUs (twenty-foot equivalent units) compared to 1,241,000 TEUs in 2010. Gross profit per TEU of Ocean Freight was down 8% (+3% currency adjusted) for the full year 2011. In Air Freight, volume growth was negatively affected by the profitability restoration program. Panalpina transported 848,000 tons, 5% less than in 2010 with 892,000 tons. Yield focus led to a further increase in gross profit per ton of Air Freight, however. It was up 9% (+21% currency adjusted).
Increased EBITDA-to-gross profit margin and high free cash flow
The Group achieved an EBITDA of CHF 212 million in 2011, which was negatively impacted by CHF 27 million through currency translation. The EBITDA-to-gross profit margin increased to 14.4%, up from 14.1% (underlying) in 2010. Net working capital intensity fell to a historical low of 1.1% at the end of December 2011. Free cash flow before money market investments and acquisitions reached CHF 153 million (CHF 12 million in 2010).
Dividend payout and reduction of share capital for tax-free return proposed
Panalpina’s Board of Directors is going to propose a dividend payout and a payback scheme to the Annual General Meeting on May 8, 2012. A dividend of CHF 2.00 per share is planned. In addition, the general assembly is to approve a tax-free payback of CHF 1.90 per share through a reduction of the share capital. The nominal value per share is to be reduced from CHF 2.00 to CHF 0.10. The combined result of the proposed dividend payout and the reduction of share capital is a return per share of CHF 3.90 or a yield of 4.1% (based on 2011 year-end share price).
Significant investments across all product divisions
While Panalpina continued its strict focus on restoring unit profitability in 2011, it also made significant investments in future growth. “We invested in sales people and especially our product divisions. Today, our products and services are as strong as never before,” said Chief Operating Officer Karl Weyeneth.
As announced earlier, the Group signed a new ACMI (aircraft, crew, maintenance and insurance) contract for two leading-edge technology Boeing 747-8F. The aircraft will go into service in the first half of 2012 and operate in Panalpina’s unique own-controlled air freight network, replacing two Boeing 747-400F. With the new aircraft, Panalpina is optimally set up to meet industry specific requirements and the increasing demand for large-freighter capacity, especially in the healthcare, high-tech, automotive and oil and gas industries.
In Ocean Freight, Panalpina launched more than 50 new direct Less than Container Load (LCL) services during 2011. The new regular services meet increased customer demand for reliable LCL solutions mainly on the Asia-Europe and Intra-Asia trades.
In Logistics, the Group extended its offering with Value-Added Logistics Services (VAS) and new logistics centers for example in Huntsville (USA) and Tianjin (China).
The Group’s Industry Verticals Automotive, Healthcare, Hi-tech, Telecom and Fashion performed particularly well in terms of gross profit growth. In Oil and Gas, the signing of a strategic services master agreement with one of the world’s largest oil and gas companies marked a major milestone in the execution of the Group’s growth strategy.
“We have a strong business model and we have laid a solid foundation to stand our ground even in difficult times. We will keep a strong focus on productivity increases and cost control. Following our ambition to provide end-to-end Supply Chain Solutions, we will also push our Value-Added Logistics Services in 2012,” said Ribar. Panalpina expects the air freight market to further decline in the first half of 2012 resulting in an anticipated market growth of 0% for the full year. In ocean freight, Panalpina expects a market growth of 4-5%. The Group’s target is to outperform the market. “2012 will be challenging. Expectations for near-term volumes are soft, especially in air freight where we expect to outperform the market as of the second quarter,” noted Ribar.