Sluggish demand from high-yield cargo verticals hits Panalpina in 1H19 

Swiss  forwarding giant Panalpina reported airfreight volumes up 5% year-over-year to 512,000 tonnes for the first half of 2019 as recent acquisitions began to boost turnover.  

Despite the higher overall volumes for the first half of the year, airfreight gross profit was 5% lower at US$342 million (CHF 337.2 million), which, Panalpina blamed on lower demand from high-yield verticals, such as automotive. As a result, earnings before interest and taxes (EBIT) for airfreight dropped 28% drop to US$38.9 million (CHF38.4 million).  

Aggregate 1H19 gross profit for the company’s three units was 4% lower year-over-year at $726.9 million (CHF 716.4 million). Total EBIT, meanwhile, dropped 4.7% lower at $52.8 million (CHF 52.1 million). CEO Stefan Karlen noted headwinds in the second quarter stemming from Panalpina’s coming merger with DSV, which has caused competitors to go “more aggressively” after Panalpina. 

DSV and Panalpina reached an agreement in early April, in which Denmark’s DSV announced it would be buying the Swiss Panalpina for $4.6 billion. The merger will create one of the world’s largest logistics companies, with a combined pro forma revenue of approximately US$17.7 billion. The deal is expected to close at the end of the third quarter this year.  

Panalpina, for its part, is starting to see the impact of its own acquisitions. Over the past year, the forwarder acquired logistics company CargoMaster and its Ecuador-based subsidiary Laseair S.A. in April, in an effort to grow its perishables network. Last June, Panalpina also acquired Argentina-based Newport Cargo S.A. for the same reason.