Airfreight volumes, earning continue to rise at Panalpina in Q3

Panalpina announced a slight increase in earnings before interest and tax (EBIT) in spite of what it referred to as a “challenging market.” Airfreight volumes for the Swiss forwarder increased 9 percent, year-over-year, for the first nine months of 2016, even as the overall air cargo market decreased by an estimated 1 percent during the same period.

That said, numbers from other forwarders, and aggregate cargo volumes from the likes of IATA, suggest that a more apt description of the market is one of modest growth. Third-quarter numbers from Panalpina substantiate this position. Net income rose 2.5 percent, y-o-y, to US$25 million, as gross profit fell 4.3 percent to $359 million. Operating income (EBIT) for the quarter was up 2.8 percent to $33 million.

The gains in net income and EBIT were bolstered by the company’s Air Freight division, which reported Q3 volume up almost 10 percent, y-o-y, to 228,000 tonnes, while divisional operating profit jumped 25.1 percent to $27 million over the same quarter. For the first three quarters, the volume gain was similar – up 8.8 percent, y-o-y, to 669,000 tonnes. Operating profits were hammered by a second-quarter restructuring charge, declining 11.2 percent to $61 million.

The turnaround comes as Switzerland’s other heavy-hitter, Kuehne + Nagel, posted numbers last week that could point towards a turnaround. Compared to the first nine months of 2015, total volume at K+N increased by 2.2 percent. Gross profits for the entire company rose by 6.4 percent, y-o-y, to $4.95 billion and the EBIT-to-gross profit margin was 30.7 per cent, up slightly from 2015’s 30 percent. EBIT improved by 8.9 percent to US$ 222.29 million, y-o-y.

Panalpina’s Ocean Freight division had less to celebrate, with third-quarter volume down 8.8 percent, y-o-y, to 379,000 20-foot-equivalent units (TEUs), cutting EBIT in half to just $5 million. For the first nine months of 2016, Ocean Freight volume was down 9 percent, y-o-y, to 1.1 million TEUs and, much like the Air Freight division, Ocean Freight EBIT second-quarter restructuring costs took a bite out of earnings, which dropped 72.4 percent to $6 million.

Panalpina CEO Stefan Karlen described Panalpina’s position as “absolutely committed to maintaining our cost discipline, while at the same time intensifying our focus on top-line growth. It is our firm intention to grow organically, but also by way of bolt-on acquisitions. In this process, we don’t expect any tailwind from the markets in the foreseeable future.”