Bruce Barnard & Alan Field | Mar 03, 2009 2:02PM EST
Bucking the economic downturn, the Kuehne + Nagel Group enjoyed its best results ever in 2008, despite a significant decline in cargo volume during the fourth quarter of last year.
The Schindellegi, Switzerland-based company increased annual net earnings 9.1 percent in 2008 on higher ocean container and global air freight traffic and rigorous cost controls that blunted the impact of the global economic slowdown.
But the Swiss logistics giant warned there are no indications the world economy will recover quickly so "further volume reductions are expected in all business units."
Net earnings rose to $500 million last year from $458 million in 2007 on a three percent gain in revenue to $18.5 billion. Fourth quarter earnings rose 7.3 percent to $113.6 million.
Gross profit, a key indicator of performance after deducting customs, security surcharges and freight rates, rose four percent to $5.34 billion from $5.13 billion.
"The economic slowdown, which accelerated … in scope and pace in the last quarter, severely affected the logistics industry," said Reinhard Lange, CEO of Kuehne & Nagel International. "Thanks to the stable development of the business in the first nine months and the early adaptation of rigorous cost controls, we were able to soften the impact of reduced volumes, while improving results compared with the previous year."
Ocean container volume rose two percent in 2008 to 2.67 million TEUs and operating profit increased 7.3 percent. The group said it bucked market trends by significantly increasing export shipments and boosting market share on routes from Asia to North and South America and to the Middle East. However, cargo volumes declined in line with market trends on the key Asia-Europe and Europe-North America trade lanes.
Air freight traffic rose 2.1 percent despite the biggest ever decline in volumes in December. Net earnings rose just 0.9 percent but operating margins remained high at 5.7 percent against 5.9 percent in 2007 as a result of strict cost management and intensified marketing of value-added air freight solutions.
The contract logistics unit maintained revenues at 2007 levels despite adverse currency movements, but falling demand from a large number of customers in the US, Canada and Britain reduced capacity utilization and eroded margins. In addition, start-up costs in Eastern Europe trimmed operating profit by 12.2 percent.
Road and rail volumes were strong during the first nine months of 2008, supported by the successful integration of the two German groupage providers G.L. Kayser and Cordes & Simon. However, order volumes declined significantly in the fourth quarter.
The takeover of the Alloin Group, effective January 1, 2009, was an important milestone, the company said, because it provides Kuehne + Nagel a strong foothold in France, where it is expected to support growing volumes across Europe.