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Further persistent growth and strong profitability increase

Nov 1, 2007

The global freight transport and logistics group Panalpina continued its strong organic growth and again improved its profitability in the first nine months of 2007. Substantial new business wins in the major strategic key industries helped to further increase market shares in all areas. Gross profit grew by 16.4%, Ebit by 33.1% and net earnings by 33.3%.

“These excellent nine months results have been achieved thanks to the continued very strong demand from our worldwide customers throughout all industries,” commented Panalpina’s Chief Executive Monika Ribar. “While all regions contributed with double-digit gross profit growth rates, we keep expanding our market shares in air freight, ocean freight and supply chain management. In view of the overall solid world economy, we are confident to meet our growth targets for 2007.”

Panalpina Group: Results for the first nine months 2007

in million CHFQ1 - Q3 2007Q1 - Q3 2006+ / -
Gross revenue7,712.86,773.613.90%
Net forwarding revenue6,287.45,636.311.60%
Contribution margin (gross profit)1,352.71,162.316.40%
Ebitda272.5204.533.30%
Ebit224.4168.633.10%
Net earnings158.8119.133.30%

Convincing results on a worldwide basis

Contribution margin (gross profit) increased by 11.0% in Central and South America, 14.0% in North America, 16.8% in Asia / Pacific and 18.0% in Europe / Africa / Middle East / CIS, which demonstrates that the solid overall performance continues to be supported by contributions from all of Panalpina’s reporting regions. While Asia-outbound remains the most important traffic generator for the industry, Panalpina experienced particularly strong demands on the Europe-to-Africa and the Latam-to-Noram routes in air freight and in the intra-Asian and Latam-to-Noram traffics in ocean freight.

Further expansion of market shares in all core activities

Panalpina further expanded its market shares by persistently growing above the respective growth rates in all core activities. Air freight tonnages increased by 8.7% (market slightly below 5%) and ocean freight volumes by 15.1% (market 9 to 10%). In terms of gross profit, air freight grew by 19.2%, ocean freight by 8.8% and supply chain management activities by 21.0%.

All key industries with substantial new business wins

Panalpina’s strategic key industries, which include the automotive, healthcare, retail and fashion, hi-tech, telecom and the oil & gas sectors, showed very satisfying developments throughout. Among the many business wins in the third quarter were substantial new ocean freight contracts with a global telecommunications solutions provider and a leading car manufacturer as well as major air freight contracts with a global sports apparel manufacturer, a world-leader in mobile communication and a global player in healthcare and lifestyle technology. A further interesting new contract was signed for the transportation of high-value pharmaceutical and healthcare products with Panalpina’s long-standing customer Solvay Chemicals (see separate media release of today).

Financial impact of suspended services confined to forecasted range

The effect from the suspension of certain services in Nigeria and related costs (including legal and advisory fees of CHF 2 million) impacted the Group’s Ebitda in the third quarter by CHF 7.5 million. The company is therefore confident that the total Ebitda impact will be confined to the earlier forecasted range of CHF 20 to 30 million for the full year 2007 and CHF 40 to 50 million for 2008. Moreover, the Ebit 2007 suffered from a one-time goodwill impairment of CHF 11.3 million related to the Nigerian subsidiary. Panalpina’s resolute efforts to further strengthen its worldwide compliance organization and staff training initiatives are progressing according to plan.

Further positive outlook

In view of the generally strong development of the global economies, Panalpina is convinced to further profit from the favorable market trends and to realize its target in line with the financial guidance given for 2007.

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. Energy Solutions is a specialized service for the energy and capital projects sector. The Panalpina Group operates a global network with some 500 offices in more than 75 countries, and it works with partner companies in a further 90 countries. Panalpina employs 15,000 people worldwide who deliver a comprehensive service to the highest quality standards – wherever and whenever.