Panalpina achieves considerable cash flow increase

Apr 29, 2009

The Panalpina Group more than quadrupled free cash flow and grew gross profit per unit of cargo well above 20% in the first quarter 2009. In a very difficult market environment, the company’s gross profit declined by 11,4% compared to the same period of 2008 (-7.7% in local currencies). The implemented cost-cutting program shows encouraging results and is in line with the previously announced target of CHF 130 million savings until the end of the year. Net earnings decreased to CHF 1.9 million.

„The massive recession-related global volume decline seen since the end of 2008 has impacted Panalpina on all major trade lanes and had negative effects on the results in the first quarter”, comments CEO Monika Ribar. „However, with the cost-cutting program on track and an excellent cash flow performance, Panalpina is well equipped to tackle the challenges in an ongoing difficult business climate”, she adds.

Air- and ocean freight suffer from global economic downturn

Due to the financial and economic crisis, transport volumes have taken a further step down since the beginning of the year. All trade lanes were affected both in ocean freight and air freight. With -28% in air freight tonnage and -23% in ocean TEU’s, Panalpina’s volumes experienced sharp declines mainly due to the fact that many big companies among its customer portfolio have suffered above-average order and production cutbacks. This was particularly the case within the automotive and hi-tech industry which severely affected Panalpina’s volumes on the trans-atlantic and trans-pacific trade lanes.

Cost-cutting program well on track

The additional cost measures announced in March, including a reduction of the Group’s worldwide workforce by about 10%, show the expected results. By March 31, around 1’000 jobs have been taken out. The company is confident to reach its target to cut operating costs in 2009 (compared to 2008) by CHF 130 million. In the first quarter, severance provisions in connection with the job reductions as well as legal and consulting fees associated with ongoing investigations have negatively affected the operating result, and EBITDA decreased to CHF 14,4 million. Gross profit declined by 11,4 % (-7,7% in local currencies). Due to the efficiently and tightly managed net working capital, cash and cash equivalents amounted to CHF 508 million at the end of the quarter. “I am very pleased with this achievement as in tough times like these, liquidity and a strong balance sheet are key factors” comments CEO Monika Ribar.

Panalpina Group: First Quarter 2009 Results

(in million CHF)Q1 2009Q1 2008
Forwarding services1,996.12,557.4
Net forwarding revenue1,610.12,134.0
Gross profit375.1423.6
Consolidated net earnings1.932.2

„The quarter was dominated by a global decline of transport volumes never experienced before. However, Panalpina has taken appropriate measures in time and will benefit from those actions focused on customer service and sales once they will be fully implemented in the weeks and months to come”, explains CEO Monika Ribar. “For the time being, it is impossible to predict when the macroeconomic situation may improve, but we are confident to overcome the difficult times in good shape, concentrating on first class services, strict cost control and ensuring high liquidity”, she adds.

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.