Strong air freight gains save Panalpina’s 3rd quarter

Switzerland-based forwarder and logistics services provider Panalpina reported third-quarter net income up 2.5% y-o-y to US$25 million, as gross profit (what some forwarders call net revenue) fell 4.3% to $359 million. Operating income (EBIT) for the quarter was up 2.8% to $33 million.

For the first three quarters of 2016, Panalpina’s net income was down 32.9% to $47 million, while gross profit declined 1.4% to $1.10 billion and operating income rose 1.3% to $95 million.

The overall small gains in net income and EBIT were driven by a strong performance by the company’s Air Freight division, which reported third-quarter volume up almost 10% to 228.000 tonnes, while divisional operating profit jumped 25.1% to $27 million. For the first three quarters, the volume gain was similar – up 8.8% to 669,000 tonnes, but operating profit, hit by a second-quarter restructuring charge, was down 11.2% to $61 million.

As we pointed out in our analysis of third-quarter results from Switzerland’s other big forwarder, Kuehne + Nagel, which also reported a strong air freight forwarding performance, the gains come against a background of modest growth in worldwide air freight demand.

Things were not so rosy in Panalpina’s Ocean Freight division, where third-quarter volume fell 8.8% to 379,000 TEUs and EBIT fell by half to just %5 million. For the first nine months of 2016, Ocean Freight volume was down 9.0% to 1.10 million TEUs and, as was the case in the Air Freight division, Ocean Freight EBIT was hit by the second-quarter restructuring change and dropped 72.4% to $6 million.

The Logistics division reported falling gross profit in both the quarter and the year-to-date, while logistics EBIT for both periods hovered just over break-even.