Panalpina reports organic growth in the first quarter

Apr 29, 2008

Strengthening of the Executive Board and management structures

The global freight transport and logistics Group, Panalpina, significantly increased its net forwarding revenue in the first quarter 2008 compared to the first quarter 2007 by 9.2%, currency adjusted even by 15.3%. The gross profit was with -2.2% slightly behind, however currency adjusted 3.1% above the previous year’s first quarter. With -39.7%, net earnings, impacted by the situation in Nigeria, were considerably below the first quarter 2007. In order to achieve an even more direct and customer-focused market approach, the Board of Directors has unanimously approved CEO Monika Ribar’s application to enhance the company’s management structures and to extend the Executive Board from five to seven functions.

„In a changing global market with increasingly complex customer requirements, short reaction times and structures enabling flexible decisions are core elements for success“, states CEO Monika Ribar. „With the new management structure, to be implemented with immediate effect, we consequently continue on our path to be customer-focused and very close to the market“, she further explains. In order to build up even closer ties to customers’ business, the function Product & Procurement is now represented in the Executive Board. In addition, as a strategic management instrument, Human Resources is also a newly established Executive Board function. All the new Executive Board positions have been filled by highly qualified members of management from within the Group.

Sandro Knecht (42), who was responsible for the region Europe as Regional CEO until now, has been appointed Chief Sales Officer. The former head of Ocean Freight, Dominik Tichelkamp (45) will assume the responsibility of Chief Product Officer. Also newly represented on Executive Board level is the Head of Human Resources, Alastair Robertson (48).

Karl Weyeneth (44), has been nominated Chief Operating Officer (COO). In this function the former Regional CEO Noram will also assume the operational responsibility for all regions of the Group. He will take over from Jörg Eggenberger who is leaving the company by mutual agreement. Monika Ribar has acknowledged his major achievements and explained that „for many years he has considerably contributed to the development of the company.”

Significant organic growth in 1st Quarter

The Panalpina Group significantly increased its net forwarding revenue in the first quarter 2008 compared to the first quarter 2007 by 9.2%, currency adjusted by 15.3%. All regions have contributed to the pure organic growth. While Central- and South America, Asia/Pacific and Europe/Africa/Middle East/CIS increased their net forwarding revenues by more than 8%, North America’s growth, impacted by the weak dollar, was only 3%. The Group’s contribution margin (gross profit) was slightly behind with -2.2% but currency adjusted 3.1% above the previous year’s result.

Air- and Ocean Freight outperformed market growth

In its core activities the Panalpina Group outperformed compared to the market. In ocean freight volume growth increased by 14% (market growth at 6% to 7%). The air freight tonnage increased by 4.4% (market growth at 3% to 4%). In view of the high fuel price a certain shift from air freight to ocean freight was observed.

Panalpina Group: First Quarter 2008 Results

(in million CHF)Q1 2008Q1 2007+/-
Forwarding services2,557.42,422.7+5.6%
Net forwarding revenue2,134.01,954.6+9.2%
Contribution margin (gross profit)423.6432.9-2.2%
Consolidated net earnings32.253.4-39.7%

Operating results influenced by Nigeria situation

The operating result was negatively impacted by CHF 20.6 million as a consequence of the situation in Nigeria, as previously communicated. Legal and consulting fees of CHF 9.2 million are included in the aforementioned amount. As a consequence Ebitda decreased by 32.6% compared to the same period in the previous year. Consolidated net earnings were, as already informed, with -39.7% significantly below the respective results in the first quarter 2007.

However, the corresponding quarter periods 2007 and 2008 are hardly comparable. Whereas the first three months traditionally are the weakest quarter in the calendar year, the first three months of 2007 were positively influenced by exceptional business wins in the volatile Project- and Supply Chain Management segments and above average volume increases in air freight. This was not the case in 2008.

„The quarter result is comparable to first quarter results of other years“, explains CEO Monika Ribar. “Operating results of 2008 are therefore from this perspective satisfying.” In view of both the positive developments in net forwarding revenue, gross profit and volumes and the first results of the cost optimization program initiated in February of this year, Panalpina is confident that it will achieve its 2008 annual targets. The adjustment of the organization in Nigeria in relation to the reduction of its service portfolio is underway. This process is expected to be completed in the second half of this year.

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.