Kuehne+Nagel’s first quarter profit slumped to $73.5 million from $167.5 million a year ago as the Swiss global logistics group was hit by a $70.2 million European Union antitrust fine, pricing pressures in air and sea freight and higher spending on growth initiatives.
Revenue was unchanged at $5.2 billion and gross profit, struck after deducting freight rates customs dues and security charges, improved by 3 percent to $3.76 billion. Operating earnings, excluding the antitrust fine, declined 12 percent to $235.5 million.
“As a consequence of the experience made in the first quarter of 2012, we have intensified our cost management. We are confident that the measures implemented as well as solid growth will contribute to an improvement of results in the second half of the year,” said Reinhard Lange, CEO of Kuehne+Nagel International.
Container volume rose 9 percent year-over-year in the quarter outpacing market growth of 3 to 4 percent, with gains in the trans-Atlantic and trans-Pacific trade. But operating profit declined 15.2 percent from the first three months of 2011 as margins were squeezed by “significant” freight rate increases in several trade lanes.
Air freight tonnage rose 4 percent while the international market shrank an estimated 3 percent, with growth in South America, intra-Asia and routes from Asia-Pacific to the Middle East. The business suffered a loss of $11.9 million because of the antitrust fine.
Road and rail logistics volumes increased despite economic difficulties in southern Europe and net revenue grew 18 percent in local currencies driven by a strong performance by the U.K.’s RH Freight Group, acquired in 2011.
Contract logistics revenue increased 6 percent adjusted for currency movements on strong growth in Central Europe, Asia and South America but slimmer margins and lower volumes in France and southern Europe cut operating profit by 19.5 percent.
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