Panalpina posts flat profits in post-oil market

Long-term low oil prices are forcing Panalpina to restructure and pivot towards other sectors in search of cargo, the 3PL said in its report on first-half results for 2016, which were mostly lackluster

Panalpina announced a gross profit of US$745.8 million for the first half of 2016, which CEO Peter Ulber noted was relatively flat, year-over-year, as the company took on restructuring costs of $26.3 million in an effort to realign its “capacities with the current volumes and not wait for the market to recover.”

Factoring in one-off costs, earnings before interest and tax (EBIT) remained stable at $61.6 million, while consolidated profit increased to $48.5 million for the first six months of the year, up from $45.9 million a year earlier.

Panalpina’s airfreight volumes, however, rose 8 percent, y-o-y, in the first half of 2016, beating out the market, which decreased by an estimated 3 percent. Volumes generated by recent acquisitions, such as Airflo, accounted for 6 percent of Panalpina’s airfreight growth. The flower business, where Airflo has a large footprint, provided a major boost to its new parent company.

Higher volumes in the perishables sector were not enough to overcome the losses in the oil-and-gas sector, which drove Panalpina’s gross profit per ton down 4 percent in air cargo, to $699 (2015’s rate was $729.5). This resulted in a gross overall profit of $308.5 million for the first half of 2016, up from 2015’s   $289.75 million for the first half. Airfreight registered an adjusted EBIT of $46.3 million. Meanwhile, adjusted EBIT-to-gross-profit margin for the first half of 2016 was 15.0 percent.

“We still consider the oil-and-gas industry as a strategic business, and are confident that we have taken the right measures in a market that is slowly stabilizing,” Ulber stressed. “In all other industries, our business has shown good momentum, and we expect this to continue throughout the year.”