Panalpina returned to profit in the second quarter from a year earlier loss by ending high-volume low-margin contracts across its global network.
But the Swiss forwarder and logistics group lowered its growth forecast for ocean container and air freight in 2011 after growth slowed in the three months through June.
Panalpina, the fourth-largest forwarder, posted a $58 million profit before interest and tax in April-June against a $101.6 million loss in the second quarter of 2010.
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Gross profit after deducting customs, security charges and freight rates dipped 2 percent to $486 million, largely reflecting the strength of the Swiss franc, which had a “considerable” impact on results. Adjusted for currency movements gross profit increased 10 percent.
Net forwarding revenue shrunk to $2.1 billion from $2.5 billion through Panalpina’s culling of low margin business.
“After having terminated certain high-volume, low-margin contracts we were not able to compensate for these volumes fast enough with new business,” said CEO Monika Ribar.
“The market slowdown in the second quarter of 2011 did not help in this regard.”
The North America segment reported the highest gross profit growth in local currencies, driven by the oil and gas sectors and strong air freight yields in a slowing market. Latin America was the second most profitable region.
Gross profit per ton of air cargo increased nine percent [20 percent currency adjusted] year-on-year, while volume was down 9 percent. Gross profit per 20-foot ocean container fell 7 percent [plus six percent currency adjusted], while volumes were up 3 percent.
Panalpina, which competes with Swiss rival Kuehne+Nagel and Germany’s DHL and DB Schenker, lowered 2011 market growth expectations to 1 to 2 percent for airfreight and to 5 percent for ocean freight.
“In a slowing market it will be difficult to match or even outperform market growth in 2011 but we have set the basis for sustainable, profitable growth going forward,” Ribar said.
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