“After a weak July and an improvement in August, we expected our Air Freight volumes to grow sequentially in September. However, compared to August they came in much weaker than seasonally normal, especially on Europe-related trade lanes,” says Panalpina’s CEO Monika Ribar.
Panalpina’s substantial exposure to air freight and its most important market Europe left its mark on the company’s latest financial results. Panalpina saw significant volume decreases on most European trade lanes, both in import and export. Panalpina’s Air Freight division accounts for almost 50% of the company’s net forwarding revenue and around two thirds of the Air Freight volumes come from trade lanes involving Europe.
Compared to the previous year, particularly Air Freight volumes of major customers in key industries such as high-tech, telecom and chemicals decreased substantially in the third quarter. These three industries alone account for roughly 40% of Panalpina’s Air Freight volumes. On the upside, Panalpina shipped significantly more air freight for its customers in healthcare, oil and gas as well as manufacturing in Q3. The trend towards smaller shipments was accentuated. While the number of handled Air Freight files during the third quarter remained practically unchanged year-on-year, tonnage dropped by 8%.
“During the course of the third quarter it became evident that the expected volume recovery in Air Freight in the second half of 2012 would not materialize,” says Ribar.
While Panalpina began to adapt its workforce to the lower volume environment during the third quarter, the associated cost savings have not yet had a positive effect in that period. Operating expenses increased from the last quarter, partly because of provisions of around CHF 12 million in September for accrued salaries of staff leaving the company. The cost savings are expected to kick in as of the fourth quarter.
The continued increase in Ocean Freight volumes in the third quarter of 2012 could not make up for the weak Air Freight volumes. Based on the preliminary financial figures the Group expects a third quarter EBITDA of CHF 15-20 million.
Detailed financial results and an outlook will be published on November 2, 2012.