Panalpina Sees Increased Cash Flow Despite Lower Volumes

The Panalpina Group significantly increased its transport volumes in the third quarter of 2009 compared to the second quarter. Air freight volumes grew by 10 percent and ocean freight volumes by 13 percent . Compared to the first nine months of 2008, free cash flow increased by 39 percent to CHF 161 million (US$158) despite 18.5 percent lower gross profits. In terms of operating costs, Panalpina is on track to achieve the previously announced full year CHF 130 million reduction.

"Between the second and third quarter of 2009, Panalpina recorded higher volumes in both air and ocean freight“, comments CEO Monika Ribar. “But as the numbers in the nine-month comparison show, the market environment remains difficult. This is why we continue to intensify our sales efforts by optimizing our customer mix and by expanding our offerings in global supply chain management.”

Air freight volumes grew by 10 percent and ocean freight volumes by 13 percent between the second and the third quarter of 2009. On a year-to-year basis, air freight volumes were down by 25 percent and ocean freight volumes by 18 percent .

While these numbers reflect weak development on many trade lanes, Panalpina has gained air freight market share on the transpacific trade lane and ocean freight market share on Asia-Europe, the company’s most important ocean freight trade lane. Gross profit declined by 18.5 percent to CHF 1,065 million and has been impacted during the third quarter by significantly higher freight rates that could not be fully passed on to customers. Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) decreased to CHF 73 million, having been negatively impacted by year-to-date legal fees of CHF 44 million which are related to ongoing investigations.

In order to better align the company in this difficult market environment, The company has stepped up its sales efforts. Measures include an increased focus on the Small and Medium Enterprises (SME) segment in order to optimize the customer mix and on extending its offerings in the field of global supply chain management.

In addition, the design and implementation of a trade lane management concept, the appointment of a global head of sales reporting directly to the executive board, intensified sales training as well as improved visibility and transparency are anticipated to spur growth in the coming quarters.

Panalpina, www.panalpina.com