Panalpina plunged to a loss of 70.2 million Swiss francs ($74.4 million) in 2012 from a 127.4 million franc ($135 million) profit in 2011 as the global logistics and freight forwarding group took a triple hit from a softening air freight market, weak European imports and antitrust fines.
The Swiss company’s loss was checked by improved performances by its ocean freight and logistics businesses.
Underlying earnings before interest, tax, depreciation and amortization shrank 43 percent to $128.4 million from $224.8 million. Net forwarding income edged 2 percent higher to $7 billion, and gross profit dipped 1 percent to $1.5 billion.
One off charges, including European Union and Swiss fines for alleged participation in an air freight forwarding cartel and a goodwill write-off for Grieg Logistics, amounted to $121 million.
“Our 2012 results are unsatisfactory,” CEO Monika Ribar said. “We did not manage to compensate for the setback in air freight. In ocean freight and logistics, we considerably expanded our business despite a slowing market, but it was simply not sufficient. On the cost side, we did not react fast enough.”
Global air freight traffic shrank more than 2 percent in 2012, the second consecutive decline. Perishables and fashion goods were the only sectors that saw volume growth, while the high-tech and telecom sectors, where Panalpina has a high exposure, experienced the steepest declines.
Panalpina also suffered from its high exposure to European trade lanes of which only one, from Latin America, registered growth over 2011.
The ocean freight traffic rose 6 percent, twice the market growth rate, to a record 1.388 million 20-foot-equivalent units. But gross profit per TEU slipped 1 percent to $352 as carrier freight rates gradually softened after steep increases in the first half of the year.
Ribar is downbeat about prospects for the current year. “The market environment will remain difficult and volatile, and we are therefore very cautious regarding forecasts for 2013. We will have to stay very vigilant so that we can take necessary actions fast.
“Given our high exposure to cyclical industries and the trend to lighter shipments in certain product categories, we are also critically reviewing our customer portfolio in air freight.”
Panalpina will build on its positive performance in ocean freight and continue to invest in logistics, Ribar said.