Kuehne+Nagel net turnover up 1%

Swiss freight forwarder Kuehne+Nagel Group today reported CHF 6 billion ($6.8 billion) in net turnover for the second quarter, an increase of 1% year over year. [caption id="attachment_57138793" align="alignright" width="300"] Pictured is a Kuehne+Nagel air logistics hub at Paris Charles de Gaulle Airport. (Courtesy/Kuehne+Nagel)[/caption] THE BIG PICTURE: Though the YoY increase in net turnover was small for Q2, it is an improvement from Q1 and 2023, when the company (K+N) saw YoY decreases in net turnover. K+N reported an 18% YoY decrease in net turnover in Q1 and a 40% YoY decrease in 2023. The company’s air logistics division was the only division to record a YoY increase in net turnover for Q2, which denotes a recovering airfreight market. BY THE NUMBERS: K+N reported $683 million in EBITDA, down 15% YoY, and $450.8 million in EBIT, down 23% YoY. K+N also reported for Q2 in its air logistics division: Net turnover of $2 billion, up 9% YoY; Gross profit of $482.2 million, down 4% YoY; and EBIT of $130.1 million, down 17% YoY. K+N also reported in Q2: Net turnover in its sea logistics division of $2.4 billion, down 3% YoY; Net turnover in its road logistics division of $1 billion, down 1% YoY; and Net turnover in its contract logistics division of $1.3 billion, down 1% YoY. WHAT THEY’RE SAYING: K+N continues to reorganize as part of a “road map” announced April 8 to simplify operations. The plan discontinues the regional structure , enabling direct reporting from country organizations, according to the company. “Our current priority is on cost control with the termination of the regional structure in the second quarter 2024,” Chief Financial Officer Markus Blanka-Graff said on today’s earnings call. “This reflects both a reduction of absolute costs and per-unit costs with expected [stability in] increasing sequential volumes in sea and airfreight.” STATE OF PLAY: The company’s air logistics division was bolstered by increased yield and volume, according to K+N. The division handled more than 1 million tonnes of air cargo in the first half of 2024, up 5% YoY. The most profitable airfreight segments were health care and semiconductors, according to the earnings report, and Asia exports drove YoY and seasonal sequential growth. “Air logistics volume grew 7% YoY in Q2,” Blanka-Graff said. “Recurring operating expenses ticked up 3% in Q2 versus Q1 due to inflationary pressure as the bulk of annual wage increases takes effect every April.” Demand for combined sea-air logistics grew in H1 2024 in response to the ongoing supply chain disruption in the Red Sea caused by Houthi attacks on vessels. “The recovery in demand for airfreight had a positive impact while the renewed disruptions in the Red Sea created additional complexity in supply chains worldwide,” Chief Executive Stefan Paul said. FLASHBACK: K+N ranked first on Air Cargo Next ’s Power 25 list of top freight forwarders, moving 2.23 million tonnes of air cargo in 2022. NOTEWORTHY: K+N acquired Canadian customs broker Farrow in February, which supports K+N’s planned growth on the southern border of the United States, according to the release. Farrow had 830 employees in 41 locations across Canada and the United States, and managed more than 1.5 million customs entries in 2022, according to a Nov. 28, 2023, release from K+N. As part of its expansion along the U.S.-Mexico border, K+N will open a 363,000-square-foot facility in El Paso, Texas, on Aug. 5 to meet growing demand resulting from nearshoring. K+N also opened locations in the United States and the United Arab Emirates to meet increased demand in e-commerce and health care, according to the earnings release. FUTURE LOOK: K+N continues to lean on eTouch , a digitalization platform that aims to create seamless and efficient interactions between forwarders and customers. K+N calculated that eTouch saved 1.7 million hours of human labor in the first half of 2024, about 3% more time than in H1 2023. This saved about $3.20 per 100 kilograms of freight, according to the company. “On the technology front, we improved our ability to exploit our data and continue to identify a test [generative] AI use case or use cases,” Blanka-Graff said. THE BOTTOM LINE: “We expect stronger group profits in the second half relative to the first,” Blanka-Graff said. “Several factors give us this confidence: first, our visibility into stronger sea freight yields, at least through the end of Q3, alongside modest volume development; second, an expectation for an airfreight peak season in Q4; and, finally, our ongoing yield and cost management efforts.” MARKET REACTION: Shares of Kuehne+Nagel ( OTCMKTS: KHNGY ) were up 0.77% from market open to $60.07 as of market close today. Kuehne+Nagel has a market capitalization of $36.4 billion. Editor’s note: All amounts have been converted to U.S. dollars.

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