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Panalpina offers forwarding services along with logistics support and supply chain management. Please note that Panalpina does not handle transportation of personal effects, nor household goods for any private individual.

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Further weakening of Air Freight volumes impacts Panalpina’s profitability

Oct 12, 2012

Preliminary financial figures for the third quarter of 2012 indicate that the EBITDA of the Panalpina Group will come in at between CHF 15 and 20 million, which already incorporates a one-off extraordinary charge of CHF 12 million. Profitability was negatively impacted by disappointingly weak Air Freight volumes (-8% year-on-year) and a higher cost base. In September, the Group recorded particularly low Air Freight volumes.

“After a weak July and an improvement in August, we expected our Air Freight volumes to grow sequentially in September. However, compared to August they came in much weaker than seasonally normal, especially on Europe-related trade lanes,” says Panalpina’s CEO Monika Ribar.

 

Panalpina’s substantial exposure to air freight and its most important market Europe left its mark on the company’s latest financial results. Panalpina saw significant volume decreases on most European trade lanes, both in import and export. Panalpina’s Air Freight division accounts for almost 50% of the company’s net forwarding revenue and around two thirds of the Air Freight volumes come from trade lanes involving Europe.

 

Compared to the previous year, particularly Air Freight volumes of major customers in key industries such as high-tech, telecom and chemicals decreased substantially in the third quarter. These three industries alone account for roughly 40% of Panalpina’s Air Freight volumes. On the upside, Panalpina shipped significantly more air freight for its customers in healthcare, oil and gas as well as manufacturing in Q3. The trend towards smaller shipments was accentuated. While the number of handled Air Freight files during the third quarter remained practically unchanged year-on-year, tonnage dropped by 8%.

 

“During the course of the third quarter it became evident that the expected volume recovery in Air Freight in the second half of 2012 would not materialize,” says Ribar.

 

While Panalpina began to adapt its workforce to the lower volume environment during the third quarter, the associated cost savings have not yet had a positive effect in that period. Operating expenses increased from the last quarter, partly because of provisions of around CHF 12 million in September for accrued salaries of staff leaving the company. The cost savings are expected to kick in as of the fourth quarter.

 

The continued increase in Ocean Freight volumes in the third quarter of 2012 could not make up for the weak Air Freight volumes. Based on the preliminary financial figures the Group expects a third quarter EBITDA of CHF 15-20 million.

 

Detailed financial results and an outlook will be published on November 2, 2012.

 

About Panalpina

The Panalpina Group is one of the world's leading providers of supply chain solutions. The company combines its core products of Air Freight, Ocean Freight, and Logistics to deliver globally integrated, tailor-made end-to-end solutions. Drawing on in-depth industry know-how and customized IT systems, Panalpina manages the needs of its customers' supply chains, no matter how demanding they might be. The Panalpina Group operates a global network with some 500 offices in more than 70 countries, and it works with partner companies in a further 90 countries. Panalpina employs over 16,000 people worldwide who deliver a comprehensive service to the highest quality standards – wherever and whenever.