Kuehne+Nagel prepares for a better second half of the year
Published: Tuesday, Jul 23rd 2024, 11:40
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Logistics companies like Kuehne+Nagel have to navigate a constantly changing world. A standstill in global trade during corona was followed by a catch-up boom, which soon cooled down again. Most recently, shipping traffic in the Suez Canal has slumped drastically due to the Houthi attacks.
Since then, many freighters have been taking long detours. This was offset by a recovery in demand for ship transportation in the second quarter of 2024, said Kuehne+Nagel CEO Stefan Paul in a conference call on Tuesday. "This meant that there was not only a lack of containers, but also a lack of shipping capacity," he said. The result was a sharp rise in freight rates.
However, this has not (yet) been reflected in Kuehne+Nagel's figures: net turnover fell by 9 percent to 11.6 billion from January to June and gross profit, adjusted for volatile freight rates, fell by 8 percent to 4.3 billion Swiss francs.
As a result, the profit figures also deteriorated. Operating profit (EBIT) fell by 32 percent to CHF 778 million and net profit by 33 percent to CHF 576 million. In addition to exchange rate effects, restructuring costs also had a negative impact.
Higher profits in sight
Company boss Paul now promises improvement: "The higher freight rates have now been negotiated and passed on to customers," he said. He now expects rising volumes and better profit figures in sea freight by the end of the year. This accounts for almost 70 percent of the Group's operating profit.
A complicated world is in itself something that Kuehne+Nagel managers like. "Then we have the opportunity to sell our customers additional services with higher gross benefits for us," said CFO Markus Blanka-Graff.
A typical example of this is the combination of transportation by ship and plane for customers who cannot or do not want to put up with the longer freight times. The demand for combined offers has risen sharply recently - and this trend is also likely to continue.
Reshoring trend is no cause for concern
According to Paul, the weakness of the Chinese economy was "hardly noticeable" for Kuehne+Nagel. Domestic demand in the country is currently weak, he said. However, China as a production location remains very important - as do exports from the country.
As a globally active company, Kuehne+Nagel can also cope well with the trend towards re- or nearshoring. "Whether freight is shipped from Mexico or Vietnam instead of China is then irrelevant," he said.
Nevertheless, there is a headwind for Kuehne+Nagel on the stock market: at around 11 a.m., the shares fall by around 1 percent in a flat overall market - they thus remain the SMI laggard in 2024.
The figures were pretty much in line with expectations, stock market analysts said. They also pointed out that the shares had risen by a whopping 35% in 2023.
©Keystone/SDA
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