By continuing its pure organic growth throughout 2007 and further increasing its profitability, the global freight transport and logistics group Panalpina posted convincing annual results in line with its financial targets. The Group increased gross profit by 13.4%, Ebitda by 15.4% and net earnings by 14.8%. With Marco Gadola as new CFO and Guenter Rohrmann as proposed new member of the Board of Directors, Panalpina complements and further strengthens its executive and supervisory bodies with experienced professionals.
"Looking back on the business year 2007, I am pleased with the financial performance of the Group", comments CEO Monika Ribar. "The results demonstrate both our strong position in the market, the continued trust of our customers around the globe and the excellent performance of Panalpina's management and employees."
|in million CHF||2007||2006||+ / -|
|Net forwarding revenue||8,684.2||7,735.2||12.30%|
|Contribution margin (gross profit)||1,803.4||1,590.8||13.40%|
|Number of employees||15,301||14,304||7.00%|
|Dividend per share in CHF (gross)||3.20 *||3|
* Proposal to the Annual General Meeting of 6 May 2008
Panalpina further increased its global market shares by growing both air freight tonnages (by 8.4% to 947,000 tons) and ocean freight volumes (by 13.7% to 1,233 million TEUs) far above the respective market growth rates. In supply chain management, the Group further improved performance by accelerating its net forwarding revenue growth from 4.7% to 6.6%. Geographically, the overall 12.3% purely organic increase in Panalpina's net forwarding revenue was contributed to by all regions, except North America, which remained at the same level but doubled its Ebit nevertheless. Although hampered by freight rate increases, gross profit was up 13.4% with significant growth in all three core activities. Furthermore, a dynamic development was recorded in all customer industry verticals.
For Chief Executive Monika Ribar, "These convincing figures are further proof of the attractiveness of our services and the efficiency of our asset-light business model. We have, by pure organic growth, strengthened our worldwide no. 3 and no. 4 ranking in air and ocean freight respectively, and we were able to contract substantial new business in all our strategic customer industries, in particular in the telecommunications and automotive verticals and in project business."
During 2007, Panalpina completed the review of its entire range of services and simultaneously implemented its Group-wide and standardized Code of Business Conduct including intensive training programs on all staff levels. These efforts were designed to bring, on a going-forward basis, all Group companies into full compliance with the US Foreign Corrupt Practices Act (FCPA). Furthermore, as Panalpina has certain indications that, in the past, violations of the FCPA may have occurred, the Audit Committee has instructed an external law firm to investigate the Group's past compliance with the FCPA and has agreed with the US Department of Justice on investigation plans in a limited number of selected countries. This investigation is not expected to be completed before the end of 2008.
Monika Ribar underlines that, "We are fully committed to ensure that Panalpina only provides services which are compliant with the high ethical standards as outlined in our Code of Business Conduct. The establishment of state-of-the-art compliance policies and structures with the support of the renowned Basel Institute on Governance has been progressing according to plan. These effective measures represent a key cornerstone of our future strategy and our new corporate culture and will be instrumental in helping us to achieve our aim to actively promote compliance as one of Panalpina's key competitive strengths."
As previously announced, Panalpina suspended parts of its service offering in Nigeria in 2007. Based on the findings of the above mentioned review, the Group has decided not to resume these services and to definitely reduce its service portfolio. This decision will require a reorganization of the Nigerian business entity, a process which is based on a business plan defining Panalpina's future activities and service offering in this country. Panalpina will, however, continue to support its customers which operate in Nigeria and will also maintain its growth strategy in the oil and gas industry, in which the Group holds a leading position globally. In 2007, the total impact of the suspension on Panalpina's global network and customer relations was CHF 23.8 million on Ebitda level and thus confined to the earlier communicated bandwidth.
For 2008, management estimates the overall financial impact of the adjusted service portfolio and its enhanced compliance efforts to negatively affect the Group's Ebitda by between CHF 60 and 80 million. This Ebitda decrease already takes into account a short term cost optimization program, which will deliver noticeable results in the course of the current business year. This program, however, is only one part of a new comprehensive long-term initiative, which CEO Monika Ribar announces "to be instrumental in paving Panalpina's way forward. This high-priority corporate initiative will enhance value and deliver continued sustainable growth through streamlining the organization, further standardizing and optimizing processes on a global scale and more aggressively exploring both organic as well as external growth potential."
As already announced on 10 March, the Group has appointed Marco Gadola (44) as its new Chief Financial Officer to take office in autumn 2008. The finance and economics expert joins the Group from Straumann Holding and looks back on many years of experience with international companies. In addition, the Board of Directors will propose to the Annual General Meeting of 6 May 2008 the election of Guenter Rohrmann (67) as its new member, who will further strengthen the Board's expertise and industry know-how. Looking back on a career of over 45 years in the logistics industry, Guenter Rohrmann worked in various executive functions for renowned companies such as Air Express International (AEI), Danzas AEI Inc. and DHL. He has been Chairman of the Cargo Network Services Corporation (CNS), board member of Cargo 2000 and vice president of The International Air Cargo Association (TIACA).
In line with the solid result for the business year 2007, the Board of Directors of Panalpina World Transport (Holding) Ltd. has decided to propose to the Annual General Meeting that an increased gross dividend of CHF 3.20 (2006: CHF 3.00) per share be paid.
As Monika Ribar states "2008 will be a challenging year for the Group, impacted by intensified compliance efforts and related external fees but also due to weakening trends in certain economies. We are however convinced that above-market organic growth and underproportional operating cost development will be achieved." Considering this, Panalpina states a gross profit increase of at least 4% and an Ebitda / gross profit margin of between 17.5% and 18.5% as its new financial guidance for the business year 2008. For 2009, the Group forecasts to return to an Ebitda / gross profit margin of at least 21%. Panalpina's management is convinced that the Group's strong global network and its well-balanced service portfolio will remain highly appreciated by the customers. This confirms Panalpina's confidence in the positive development of its future business.