Kuehne + Nagel Net Profit Rises 2.3 Percent

Kuehne + Nagel Net Profit Rises 2.3 Percent

Kuehne + Nagel reported higher first quarter profit and revenue, driven by a recovery in world trade.

The Swiss freight forwarder increased net income by 2.3 percent to $123.6 million in the three months to March 31 compared with the year-earlier period.

Revenue increased by 7.3 percent to $4.3 billion, and operating profit was stable at $215 million.

"The group is back on course for growth thanks to the economic recovery and measures we introduced in 2009," said Chief Executive Officer Reinhard Lange.

"Indications are getting stronger that the global economy and logistics-related parameters are stabilizing. We are, therefore, confident of our ability of reaching our goal of above-market average profitable growth in all business units," Lange said.

Lange said he does not expect the closure of European air space due to volcanic ash from Iceland would hit second quarter earnings as cargo that isn't currently being flown will be transported shortly.

Kuehne + Nagel boosted ocean container volume by 17 percent from the first quarter of 2009, outpacing an estimated market growth of 12 percent and thus gaining market share in many trade lanes.

Sea freight traffic grew fastest on exports to China and on all export trades from Asia.

"Continued freight rate increases, however, put profit margins under further pressure," the company said.

Air freight rebounded even more strongly, with Kuehne + Nagel's tonnage surging 31 percent from the first three months of 2009 at the depth of the economic crisis when the market suffered a double digit drop in traffic.

The higher volume resulted from an investment in sales, innovative products "and not least from capacity-induced shifts from sea to air freight."

Kuehne + Nagel said it managed to grow European truck and rail revenue by 3.7 percent in the face of “sustained pricing pressure and fierce competition."

Contract logistics revenue stabilized although North American results were hit by insufficient warehouse space utilization and start up costs for new business.

Contact Bruce Barnard at brucebarnard47@hotmail.com.