The main contributor to the Group’s result is the business unit Seafreight. In 2018, major profitability improvements were generated in the Airfreight and Overland business units. In Contract Logistics strong growth has been achieved with e-commerce fulfilment customers, but expenses for the implementation of a new Warehouse Management System and various other technological improvements have put pressure on the results in 2018, which remained below last years' achievements.
Seafreight volumes increased by 7.7 per cent to 4,690,000 TEUs significantly exceeding the market growth in 2018 and thereby further expanding the Group’s global leadership position in Seafreight. Services for temperature controlled cargo in reefer containers and order management business have significantly contributed to the growth. Customers from the pharma and healthcare industry use Kuehne + Nagel to handle temperature-sensitive products. The exports from Asia to Europe and the US as well as the intra-Asia trade contributed to the strong volume growth. In 2018, EBIT increased by 1.0 per cent compared to the previous year, while the ratio of EBIT to gross profit (conversion rate) declined slightly to 28.2 per cent (2017: 29.2 per cent).
It remains the Group’s target to achieve volume growth rates that are substantially above the market and thereby gaining market shares. Simultaneously, the Group’s focus is on the Sea and Airfreight profitability and continuous efficiency gains through productivity improvements.
Seafreight volumes: Market growth ~3%
|EBIT in per cent of gross profit (conversion rate)||28.2||29.2||31.4|
|Number of operating staff||10,025||9,543||9,154|
Airfreight increased volumes by 11.0 per cent to 1,743,000 tons, confirming the Group’s position as the number two global airfreight provider. Acquisitions, including Commodity Forwarders Inc. (CFI), a company based in Los Angeles (USA), which was consolidated as of October 2017, contributed 7.6 per cent to the year-to-date volume growth. The focus on industry-specific Airfreight services like KN EngineChain, a specialised service for production, spare parts, and maintenance of aircraft engines for the aerospace industry, has significantly contributed to this success. The strategic direction to invest into such industry specific services has been consistently pursued with the acquisition of Quick International Courier as of December 31, 2018. Quick is a global market leader in time critical shipments and serves mainly the pharma and healthcare as well as the aerospace industry. Substantial new business has been gained through Kuehne + Nagel‘s state of the art services for temperature-sensitive goods, pharma-ceutical and perishables products. EBIT-to-gross-profit margin remained at an industry leading 29.5 per cent in 2018 (2017: 30.2 per cent). EBIT improved by 13.4 per cent compared to the previous year.
The Group has developed world class expertise in industry- and product-specific supply chain services through various strategic programs. Organic growth in areas such as perishables, pharma, and aerospace logistics, together with selected bolt-on acquisitions, continue to ascertain the Group’s leading position.
Airfreight volumes: Market growth ~3%
|EBIT in per cent of gross profit (conversion rate)||29.5||30.2||30.9|
|Number of operating staff||7,412||6,693||5,734|
Overland increased its net turnover by 13.1 per cent in 2018, with a strong performance of its land transport activities in Europe. The key performance indicator EBITDA to net turnover margin improved to 3.3 per cent from the previous year’s 3.0 per cent. EBIT increased to CHF 76 million (2017: CHF 49 million). With the expansion of services to industry-specific solutions, Overland has significantly contributed to the success of the Group’s integrated logistics offering.
|EBIT in per cent of gross profit (conversion rate)||7.0||5.1||3.1|
|Number of operating staff||8,456||8,040||7,894|
The focus on specialised end-to-end solutions for industries such as automotive, high-tech, consumer goods, aerospace, pharmaceuticals, healthcare, and e-commerce fulfilment led to numerous new customer contracts. This resulted in a (net of currency impact) net turnover growth of 7.1 per cent for 2018. More than 100 new logistics projects were implemented for customers in 2018, enabling the Company to manage 11.6 million square meters of warehouse and logistics space worldwide. Expenses for the implementation of a new global Warehouse Management system and deployment of technology supported operational enhancements in 2018 led to a decrease of the EBITDA to net turnover margin to 5.1 per cent versus 6.0 per cent in 2017 and a decrease of EBIT by 14.3 per cent.
Kuehne + Nagel further strengthened its global leading position in the field of integrated logistics. The Group offers specialised end-to-end supply chain management solutions, which are managed from Logistics Control Towers and performed in seamless operation with other business units, supporting customers to improve their value chain. Integrated Logistics experts develop, implement and manage solutions that streamline the customer’s supply chain to make it lean, agile and demand-driven.
Performance Contract Logistics
|EBIT in per cent of gross profit (conversion rate)||3.5||4.4||4.5|
|Number of operating staff||43,694||39,957||35,866|
|Warehousing and logistics space in sqm||11,587,597||10,631,779||10,021,688|
|Idle space in sqm||343,081||283,690||364,035|
|Idle space in per cent||3.0||2.7||3.6|