K+N’s first-half profits rise despite revenue drop

The Kuehne + Nagel Group reported that gross profits were up by by 8 percent to US$3.3 billion in the first six months of 2016, even as net sales decreased. The logistics provider’s operating result (EBITDA) grew by 10 percent to $554.9 million, while earnings before tax and interest (EBIT) were up $45.6 million over the first half of 2015, at $461.6 million. Earnings for the first half grew by 9 percent to $361.2 million, compared to the previous year.

Shrinking demand and excess capacity in the global airfreight market cranked up downward pressure on carrier’s margins, K+N said. The feeling was apparently shared by others in the industry, as seen in IATA’s most recent business confidence index survey, which found that executives in the air cargo business were dourer than ever.

Kuehne + Nagel’s air cargo revenues declined 4.1 percent to $1.9 billion in the first half of 2016. However, compared to the first half of 2015, air cargo tonnage increased by 1.3 percent so far this year, although the forwarder did not disclose actual tonnage figures in this report. The company also managed to increase its tonnage by 2.9 percent in the second quarter of 2016. This was credited to the expansion of “customer-specific services and industry solutions.” Strong export business in Asia, the Middle East and Africa also contributed, K+N said.

Profitability, reflected in the EBIT-to-gross profit margin of 30.8 percent, was slightly above the previous year’s level. EBIT improved by 8.1 percent to $149.2 million.

Detlef Trefzger, CEO of Kuehne + Nagel International AG, explained that the first half of 2016 was “shaped by different regional economic development trends. Global trade showed a lack of growth momentum.”  He added that Kuehne + Nagel had focused on “organic growth and gaining market shares by offering industry-specific solutions once again led to increases in volumes and results.”