Panalpina Profit Falls 78 Percent

Panalpina Group, the Switzerland-based logistics and forwarding provider, reported its net profit dropped 77.9 percent during the first half of 2009 compared with the same period last year, to $15.9 million, on a steep drop in ocean and air shipping volume.

Revenue from forwarding services dropped 28.6 percent to $3.5 million, and net forwarding revenue dropped 31.6 percent to $2.8 million. Gross profit dropped 15 percent to $683 million, and operating results fell by 75.4 percent to $25 million.

The company said it has significantly reduced its cost base, and it cited signs of improvement in the market. Compared with the first quarter of 2009, air freight volume rose during the second quarter of 2009 by 3 percent, and ocean freight rose by 8 percent during the second quarter, April through June.

Compared to a year ago, however, air freight volume was down 28 percent in the quarter and ocean volume fell 21 percent. 

"Panalpina suffered a sharp fall in ocean and air freight volumes in nearly all trade lanes. Newly acquired businesses also failed to make up for the losses, which had a negative impact on the first-half results," said Monika Ribar, Panalpina's chief executive, in a statement. However, "Thanks to our consistently implemented cost management program, coupled with an excellent cash flow position and a forward-looking sales strategy, we are well-positioned to master the challenges of the global business environment, which is expected to remain difficult in the second half-year."

Although "positive trends" were reported in niche lanes such as Asia-Oceania and intra-Asia, this was not enough to compensate for the drop in traffic between Asia and Europe and on the trans-Atlantic and trans-Pacific shipping routes.

The company attributed the declines to massive cuts in production in key industries such as automotive, hi-tech and telecommunications, where Panalpina has a strong presence.

"While Panalpina remains committed to its goal of faster-than-market growth over the long term, the Group intends to refrain from short-term acquisition of market shares at the expense of profitability," the company said.