Panalpina sees higher margins in air freight despite little growth
Panalpina saw a modest year-on-year growth in revenue in the third quarter 2011, up 0.4% to CHF1.57bn after the effects of the appreciation of the Swiss Franc were stripped-out.
Underlying Gross Profit grew by 11.4% whilst EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) was up by 14.8% to CHF 54.2m and EBIT (Earnings Before Interest and Tax) was up 15.6% at CHF 44.8m. The figures were complicated by the effects of the Swiss Franc which led to negative growth numbers and ’non-recurring items‘ which depressed profit growth by several percent.
Panalpina’s key air forwarding business saw volumes fall. This was due to a soft market, but also due to Panalpina looking to restore profit margins. The forwarder states that volumes were down 6% for the quarter as opposed to a 3% fall for the year so far. As a result of its rationalisation of business, gross profit- per-tonne rose by 23% after foreign exchange fluctuations were stripped-out.
At the sea forwarding business volumes increased by 8% year-on-year to a record high. However, margins fell by 2% in foreign exchange adjusted terms. Panalpina stated that this was due to "the low level of rates and highly competitive environment".
Despite the falls in volume, in the air freight market Panalpina predicted that demand would be essentially flat by the end of 2011 at 0% growth. Sea freight is expected to grow at 4-5% for the full year. Despite this less than friendly market environment Monika Ribar, CEO and President of Panalpina, commented that she expected Panalpina to hit its medium term financial targets and that "We are on the right track with profitability and volumes and we expect the organisation’s hard work that was put into the new business pipeline to bear fruit."
Panalpina’s quarterly performance is clouded somewhat by the extraordinary performance of the Swiss Franc, however it is slightly perplexing that margins are falling in sea forwarding when rates are so weak.
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