Panalpina’s Gross Profit Increases By 11%

Panalpina’s focus on profitable growth shows in strong third quarter results.  It reported strong results for the third quarter of 2011. Currency adjusted, gross profit increased by 11 percent year-on-year, supported by organic growth across all regions and segments.

Volumes outpaced the market in ocean freight and gained traction in air freight. The strength of the Swiss franc continued to have a significant adverse effect on the financial results of the Group.

“We did very well, despite fierce competition and a challenging environment. Our focus on sustainable, profitable growth is clearly starting to pay off,” said CEO Monika Ribar. “We’ve made good progress in volumes while gross profit remained high. In ocean freight we outpaced the market in the third quarter. In air freight we narrowed the gap considerably.”

Gross profit amounted to CHF 356 million (US$390 million) in the third quarter of 2011, resulting in a decrease of seven percent (+11 percent currency adjusted). Gross profit for the first nine months of 2011 came in at CHF 1’100 million, an increase of one percent (+14 percent currency adjusted). All regions and segments recorded an organic gross profit increase. Asia Pacific achieved a record gross profit for the first nine months. The region also reported the highest gross profit growth in local currencies, followed by North America, Latin America and the EMEA region.

Gross profit growth in the segments was led by air freight, which again was mainly driven by strong yields in a slowing market. The Group achieved an EBITDA of CHF 54 million in the third quarter (CHF 164 million in the first nine months). CHF 14 million of EBITDA were lost due to currency translation (CHF 29 million in the first nine months). The EBITDAto-gross profit margin showed a further improvement from Q2 (14.5 percent) to Q3 (15.2 percent) despite a slowing environment.

In ocean freight, Panalpina recorded a volume growth of eight percent and therefore gained market share. In fact, the third quarter marked the highest quarterly volumes ever in ocean freight. In the first nine months volumes grew four perccent. Gross profit per TEU (twenty-foot equivalent unit) of ocean freight decreased by 18 percent (-two percent currency adjusted) year-on-year due to the low level of rates and a highly competitive environment.

Volume growth in air freight was still affected by the profitability restoration program initiated in 2010, where unprofitable business was discontinued. Air freight volumes were down by six percent year-on-year (-three percent in the first nine months). Quarter-on-quarter the gap to the market narrowed from eight percent to less than three percent. Yield focus led to a further rise in gross profit per ton, up three percent year-on-year (+23 percent currency adjusted). Yield management also resulted in a rise of the Group’s gross profit margin year-on-year for the third quarter (22.7 percent compared to 20.4 percent).

Panalpina has slightly lowered its market growth expectations for 2011 to zero percent for air freight and to four-five percent for ocean freight. The Group has confirmed its financial targets for 2014. “We are on the right track with profitability and volumes and we expect the organization’s hard work that was put into the new business pipeline to bear fruit. Still, given the volatility of the markets, we rest vigilant,” said Ribar.