Swiss-based freight forwarder Kuehne + Nagel (K+N) has declined to make its usual forward-looking statements in its first quarter results, citing the volatility of the market making such projections impossible.
However, the decision by K+N to sell the bulk of its contract logistics division to the UK operator XPO Logistics is looking a shrewd move in this climate, though the business remains on its books at this time.
A binding agreement with XPO Logistics on 8 March to divest the UK food and drinks contracts with retail and technology included in the deal. K+N will retain its medical and pharmaceutical contracts. In the midst of the Covid-19 crisis that appears to be a shrewd move, although the company could not have known at the time how the pandemic would evolve.
“The coronavirus pandemic is an immense global challenge,” commented Dr. Detlef Trefzger, K+ N CEO, and that view is reflected in the first quarter results for the forwarder which has seen significant declines in the seaborne, airfreight and contract logistics business.
According to Trefzger production and trade volumes weakened significantly in the first quarter as a result of the virus outbreak. “Our company will face major challenges in the coming months but is well positioned in view of its customer proximity, agility and digital offerings. A high level of liquidity characterises the company’s solid financial strength,” he added.
Even so, K+N’s volumes declined sharply in the first quarter of 2020 and the group’s net turnover, gross profit and earnings “were significantly below last year’s levels.”
Currency fluctuations did not help the company’s returns but overall K+N saw a 24% decline in earnings, from CHF181 million to (US$186.04 million) to CHF139 million (US$142.87 million).
Seafreight declined by 71,000 units, year-on-year with earnings before interest and tax (EBIT) falling 29.5% to CHF79 million (US$81.2 million). Airfreight declined 11.3% with an EBIT of CHF71 million (US$72.97 million), while the EBIT for the contract business declined 34.6% to CHF17 million (US$17.47 million). Finally trucking also saw a major 29.2% decline in EBIT to CHF17 million (US$17.47 million).
