“With the backdrop of a continuously slow market, our results for the third quarter are in line with expectations,” says Panalpina CEO Peter Ulber. “We outperformed the market both in Ocean Freight and Air Freight in terms of volumes. Gross profit grew across all regions and products, albeit only moderately in Air Freight. But volatile and increasing rates both in air and ocean freight slightly impacted unit profitability. Logistics continued to show double-digit growth in terms of gross profit as a consequence of our investments in Value-Added Services.”
The Panalpina Group’s gross profit went up by 6% year-on-year and amounted to CHF 403 million in the third quarter of 2013. All regions recorded gross profit growth, led by the EMEA region with a 9% increase to CHF 198 million. Asian export volumes to Europe grew again after a weak start to the year. Intra Asia volumes saw strong growth as well. As a result, gross profit for Asia Pacific increased 5% to CHF 83 million. The Americas recorded a gross profit increase of 3% to CHF 121 million.
|(CHF million)||Q3 2013||Q3 2012||YTD 2013||YTD 2012*|
|Net forwarding revenue||1,700.1||1,721.2||5,028.1||4,928.7|
|Consolidated profit / (loss)||23.8||3.6||62.3||(20.6)|
* Antitrust fines of CHF 59.2 million (Q1 2012), provisions of CHF 12.7 million related to accrued salaries for redundancies (Q3 2012). // Personnel expenses and income tax expenses in 2012 had been restated due to the application of IAS 19 revised.
Panalpina’s Air Freight volumes continued to grow above market. They increased 4% compared to the previous year, while the market only grew by 1%. The consumer and retail, healthcare and oil and gas industries showed above average volume growth. Gross profit growth in Air Freight was moderate with 1%, reaching CHF 161 million in the third quarter. As a result of carrier rate increases, gross profit per ton decreased 3% year-on-year but remained stable quarter-on-quarter.
Panalpina’s Ocean Freight volumes increased 8% compared to the previous year while the market only grew by 3%. Strong volumes in the consumer and retail, automotive, manufacturing, high-tech and oil and gas industries led to a new quarterly volume record. Gross profit in Ocean Freight increased 7% to CHF 129 million. However, volatile carrier rates resulted in a slightly weaker (-1%) gross profit per TEU year-on-year.
Panalpina’s Logistics division recorded further gross profit growth as it continued to expand its footprint in Value-Added Services. Gross profit grew by 14% and reached CHF 113 million in the third quarter.
The Group achieved an EBITDA of CHF 48 million in the third quarter of 2013, an increase of 60% compared to the previous year. Quarter-on-quarter, EBITDA declined by CHF 4 million. This was mainly due to the fact that more personnel were hired to support the continued growth of the Logistics division. The EBITDA-to-gross profit margin increased to 12% in the third quarter from an underlying 8% in the previous year. The Group’s consolidated profit amounted to CHF 24 million in the third quarter and CHF 62 million in the first nine months of 2013.
As announced in a separate media release on October 23, 2013, Panalpina entered into a preliminary agreement to settle a U.S. civil class action lawsuit alleging anticompetitive industry practices regarding certain freight surcharges prior to 2008. Panalpina agreed to settle for USD 35 million to avoid cost and risk of trial. The settlement is subject to U.S. court approval and will impact the fourth quarter 2013 results.
“The economic environment remains fragile and we don’t expect the market to be more dynamic in the last quarter of the year,” says Ulber. “We have to balance cost control with investments in our business platform. And in a market that only grows at a small pace it is crucial that we continue to increase our customer focus.” Panalpina expects the air freight market to grow by 1% and the ocean freight market to grow by 3% in 2013. The company aims to outperform the market in both Ocean and Air Freight for the full year.