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Kuehne+Nagel slowly returns to growth path

The logistics group Kuehne+Nagel has felt the normalization after the corona boom in 2023. Now it seems to have bottomed out. Sea freight volumes rose again in the fourth quarter.

The pandemic-related boom in 2021 and 2022 had brought Kuehne+Nagel high profits. There was not much left of this in 2023. Business returned to normal for the company from Schindellegi in the canton of Schwyz.

In figures, this looks dramatic at first glance: Adjusted for the volatile freight rates of the shipping companies, gross turnover slumped by over 20 percent to 8.8 billion Swiss francs in the last financial year.

The operating result (EBIT) halved to CHF 1.9 billion, as did net profit to just under CHF 1.5 billion. The so-called conversion margin, which indicates the ratio of EBIT to gross profit, reached just under 22% (previous year: 34%).

Increase compared to 2019

At second glance, however, the declining figures are put into perspective: in the past two years, the company had benefited greatly from the turbulence caused by the pandemic: The organization of the flow of goods was more complex and therefore more expensive for customers.

This is also evident when comparing the figures for 2023 with the pre-pandemic year 2019. At that time, Kuehne+Nagel achieved a gross profit of less than 8 billion and reported a net profit of 800 million - "only" around half as much as today.

In addition, sea freight gave cause for optimism in the fourth quarter. The bottom has been reached, emphasized the Group management. Volumes are rising again and the signs are currently pointing to growth.

The Group will also benefit from the crisis in the Red Sea in the coming months. Since the Houthi rebels have been firing at cargo ships there, most container ships have been taking the detour around Cape Horn. The journey takes twelve days longer than through the Suez Canal, said Kühne CEO Stefan Paul. His company has already had to divert a total of 400 to 450 ships.

Freight rates increased

What sounds difficult also has a positive aspect for the Group: freight rates are rising. This gives Kuehne+Nagel a tailwind in terms of profitability. "We are talking about EBIT in the double-digit millions from the second quarter onwards," says CEO Paul.

Air freight has not yet returned to growth: during the coronavirus pandemic, problems in the supply chains led to a real boom here. This is no longer the case, as global supply chains are functioning very well, apart from the problems at the Suez Canal, emphasized Paul. The current subdued economic situation is also making itself felt.

On the stock market, however, the optimism of the Kühne management fell on deaf ears. Investors threw the shares out of their portfolios in a wide arc on Friday. In the early afternoon, the shares were trading over 12 percent lower at around CHF 261 - despite a positive mood on the market as a whole.

©Keystone/SDA

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