“A year ago we set out to restore profitability in 2011. Half way into the year we can say that we are well on track. I am pleased with the high organic gross profit growth in our reporting regions North and Latin America, as well as Asia Pacific. In the first half of 2011, the underlying EBITDA increased by 25%, in local currencies even by 42%”, said CEO Monika Ribar. Panalpina’s profitability restoration program that was initiated last year has taken its toll on the volume development, however: “After having terminated certain high-volume, low-margin contracts, we were not able to compensate for these volumes fast enough with new business. The market slowdown in the second quarter of 2011 did not help in this regard”, explained Ribar.
Gross profit amounted to CHF 371 million in the second quarter of 2011, resulting in a decrease of 2% (+10% currency adjusted). Gross profit for the first half year of 2011 came in at CHF 744 million, an increase of 5% (+15% currency adjusted). Currency adjusted, Panalpina recorded organic gross profit growth across all regions and segments in the second quarter. North America reported the highest gross profit growth in local currencies, closely followed by Latin America. Growth in North America was supported by the Oil and Gas business which has gained traction and new business in other industries. In the segments, gross profit growth was led by Air Freight, which was mainly driven by strong yields in a slowing market. The Group achieved an EBITDA of CHF 54 million in the second quarter (CHF 109 million in the first half). CHF 9 million of EBITDA were lost due to currency translation (CHF 15 million in the first half). The EBITDA-to-gross profit margin was stable sequentially despite the slowing environment and increased year-to-date from 12.4 to 14.7%.
|(CHF millions)||Q2 2011||Q2 2010||YTD 2011||YTD 2010|
|Net forwarding revenue||1,628.9||1,983.8||3,280.8||3,481.6|
The strong focus on unit profitability led to an increase of gross profit per ton of Air Freight by 9% (+20% currency adjusted) despite the adverse impact from the strong Swiss franc. Gross profit per TEU (twenty-foot equivalent unit) of Ocean Freight decreased by 7% (+6% currency adjusted) year-on-year. The profitability restoration program had an impact on the volumes. Volumes in Air Freight were down by 9% in the second quarter (-2% in the first half). In Ocean Freight volumes were up by 3% (+2% in the first half). Yield management resulted in a further rise of the Group’s gross profit margin, which increased to 22.8% from 20.1% a year earlier.
Given the slowing environment, CEO Monika Ribar expects world trade and market growth to turn out weaker than anticipated earlier in the year. Panalpina has lowered its market growth expectations for 2011 to 1-2% for Air Freight and to 5% for Ocean Freight. “In a slowing market it will be difficult to match or even outperform market growth in 2011 but we have set the basis for sustainable, profitable growth going forward. We are absolutely confident that we can achieve the financial targets that we have recently set for 2014”, said Ribar.