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Financial Statements 2013 of the Kuehne + Nagel Group
For the 2013 business year, the Board of Directors will propose a dividend increase to CHF 3.85 per share as well as the payment of an extraordinary dividend of CHF 2.00 per share.
Dr. Detlef Trefzger, CEO, commented: "In 2013, the Kuehne + Nagel Group fully concentrated on profitable growth. Through organisational adjustments, streamlined cost structures and a clear focus on margin improvements we achieved the goals we had set ourselves. I would like to emphasise the excellent performance in airfreight and the strong improvement of results in contract logistics. By concentrating on selective growth in seafreight, we succeeded in keeping margins stable despite high volatility of rates. The implementation of the new overland strategy also led to an improvement in profitability. Our 2013 results confirm the strength of our business model, the efficiency of our focused approach, and the value our solutions offer to customers."
Development of the business units
In a global seafreight market, which, particularly in the first half of the year was characterised by low volume growth and significant rate volatility, Kuehne + Nagel concentrated on stable margins and growing volumes on selected trade lanes. The company increased its market shares on the transatlantic and transpacific lanes, for example, but did not participate in the intensive competition on the Asia-Europe traffic. Specialised solutions such as reefer container and LCL (Less-than-Container Load) activities were successfully expanded due to growing demand. In 2013 Kuehne + Nagel handled a total of 3.6 million TEU, an increase of 3 per cent compared to the previous year. Despite a slowdown in the project business, which is traditionally subject to fluctuations, the conversion rate (EBIT-to gross profit-margin) remained stable at 30 per cent, thus achieving the 2013 target.
In 2013, again, Kuehne + Nagel's performance in airfreight was excellent, clearly outperforming market growth. By consistently implementing its airfreight strategy, the company managed to increase volumes across all quarters. In a stagnating global airfreight market Kuehne + Nagel realised profitable growth and, overall, raised its tonnage by 4 per cent to 1.1 million tons. Kuehne + Nagel's airfreight operations performed particularly well in Europe, Asia, and in the Middle East and Africa. In North America, cargo volumes increased on the routes to South America. In the area of industry-specific solutions, "KN PharmaChain", the product tailored to the pharmaceutical and healthcare industry, generated new business. "KN EngineChain", a solution specifically designed for the transport and handling of aircraft engines, experienced good market acceptance after its launch in 2013. With a conversion rate (EBIT-to gross profit-margin) increased to 25 per cent, Kuehne + Nagel met its profit margin target in 2013.
Road & Rail Logistics
After a weak first quarter, Kuehne + Nagel continuously improved EBIT compared to the previous year. This was mainly due to the new strategy "Road 2 Profit". It is based on the three distinct segments "groupage", "full and part loads" and "industry-specific distribution" as well as product innovation and centralised purchasing. In order to improve profitability in the highly competitive groupage business, Kuehne + Nagel launched the new product "KN Eurolink" and adapted the frequency of its international line haul services to the Eurohub in Bad Hersfeld, Germany, to market needs. Part and full load traffic continued to perform positively. Also in this segment, a new product, "KN EuroDirect", was introduced. In the field of industry-specific distribution, the business for the pharma- and healthcare industry grew substantially.
In contract logistics, a remarkable improvement of results was achieved. With an EBIT increase of 89.1 per cent, Kuehne + Nagel managed to almost double profit. This substantial improvement has been primarily due to the systematic implementation of the Master Location Plan, started 12 months ago. Under this initiative, some 40 unprofitable locations were closed; in addition, idle space was substantially reduced across the globe. Subsequently, EBITDA margin increased from 3.4 per cent in the previous year to 4.1 per cent. The focus on globally operating customers with complex logistics requirements and the extension of the service portfolio generated substantial new business. New customers were gained especially within the pharmaceutical and e-commerce industries.
In 2013, the Kuehne + Nagel Group achieved a turnover of CHF 20,929 million, an increase of 0.8 per cent compared to the previous year. Currency effects negatively impacted turnover with CHF 298 million.
The regions Americas (2.3 per cent), Asia-Pacific (2.0 per cent) and Europe (0.5 per cent) recorded increases; in the Middle East, Central Asia and Africa turnover declined by 1.8 per cent.
Gross profit, which is a better performance indicator than turnover for a logistics company, rose by 2.7 per cent to CHF 6,257 million in 2013. Negative currency effects had an impact of CHF 37 million.
The region Middle East, Central Asia and Africa improved gross profit by 7.5 per cent and the Americas by 5.7 per cent. In Europe, gross profit was up 2.1 per cent and in the Asia-Pacific region it was slightly below the previous year (0.2 per cent).
Operational result (EBITDA)
Earnings before interest, tax, depreciation and amortisation (EBITDA) improved substantially by CHF 107 million (12.5 per cent) compared to the previous year. Currency effects had a negative impact of CHF 11 million. With CHF 522 million (54.3 per cent) the biggest contribution to the operational result of the Group came from Europe, followed by the Asia-Pacific region with CHF 201 million (20.9 per cent). The Americas contributed with CHF 184 million (19.1 per cent) and Middle East, Central Asia and Africa with CHF 55 million (5.7 per cent).
EBITDA margin improved from 4.1 per cent in the previous year to 4.6 per cent due to strict cost control measures.
Earnings before interest and tax (EBIT)
In 2013, EBIT rose by CHF 128 million to CHF 761 million (previous year: CHF 633 million). Currency effects had a negative impact of CHF 11 million.
In Europe, EBIT increased by 22 per cent, in the Americas by 21.4 per cent. In the Asia-Pacific region EBIT improved by 11.9 per cent and in Middle East, Central Asia and Africa by 41.2 per cent.
The Board of Directors will propose to the Annual General Meeting of May 6, 2014, to distribute a dividend of CHF 3.85 per share (previous year: CHF 3,50 per share). Furthermore, the shareholders shall also benefit from the payment of an extraordinary dividend of CHF 2.00 per share.
Karl Gernandt, Chairman of the Board of Directors of Kuehne + Nagel International AG, said: "2013 was characterised by remarkable changes in the fields of personnel, structures and product focus. The Kuehne + Nagel Group has streamlined its internal structures more efficiently and established a new management team. With these initiatives implemented, the company has achieved a very good result. Our expertise in offering customers industry-specifics solutions is, and will remain, the driving force for further quality growth."
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