Kuehne+Nagel navigates challenging environment in first three quarters

Kuehne+Nagel navigates challenging environment in first three quarters
Trucks in front of the Kuehne+Nagel Swiss Pharma Hub, Moehlin. Photo and caption from K+N.
  • Kuehne+Nagel Group navigated a challenging market environment in the first nine months of the year
  • Net turnover for business units Sea Logistics, Air Logistics and Road Logistics all declined
  • Contract Logistics performed well, with EBIT showing a positive variance at 14%

The Kuehne+Nagel Group navigated a challenging market environment in the first nine months of the year, with pandemic-related special economic situation of 2021 and 2022 continuing to distort the year-on-year comparison of all key figures, the company said in a statement.

Earnings before interest and taxes (EBIT) from January to September 2023 reached CHF 1.6 billion, down 49% from CHF 3.1 billion year-on-year. The latest EBIT is, however, double the pre-pandemic levels of CHF 794 million (EBIT Q1-Q3 2019).

For the same period in review, earnings of CHF 1.2 billion sank 49% from CHF 2.3 billion.

Net turnover was CHF 18.2 billion at Group level from CHF 30.6 billion, down 41%.

The conversion rate, which describes the ratio of EBIT to gross profit of the Group, remained at a high level of 24%, the company noted.

“The Kuehne+Nagel Group performed well in the third quarter of 2023, even though the hoped-for economic recovery failed to materialize. We gained market share and secured our yields. We achieved important successes in the implementation of the strategic Roadmap 2026, particularly in the area of renewable energy and in the growth markets of Asia. In the final quarter of 2023, we will continue to focus on cost control, which is firmly embedded in our corporate culture,” said Stefan Paul, CEO of Kuehne+Nagel International AG.

Sea Logistics

Net turnover in the Sea Logistics business unit fell 54% to CHF 6.8 billion from CHF 14.8 billion.

EBIT of CHF 875 million was 49% lower than CHF 1.71 billion.

The conversion rate, however, remained at a high level of 47%, the company said.

Container volumes stood at 3.2 million TEU through the end of September 2023. No comparable figure was provided.

In an overall market that continued to decline, Kuehne+Nagel Sea Logistics recorded slight volume growth in the third quarter of 2023, which intensified in September, the company said. Market share gains were mainly on the Asia-Europe and Trans-Pacific routes.

In August 2023, Kuehne+Nagel Sea Logistics announced a major project as part of the Saudi project NEOM.

By 2025, Kuehne+Nagel will transport 1.4 million tons of equipment for the construction of wind turbines on behalf of Envision Energy.

Air Logistics

Net turnover in the business unit Air Logistics was CHF 5.0 billion, 45% less than the CHF 9.1 billion in 2022.

From EBIT of CHF 1.1 billion in the first nine months of 2022, EBIT for the comparable period this year sank 63% to CHF 429 million.

The conversion rate was 32%.

Between January and September 2023, around 1.5 million tons of airfreight were handled.

The perishables and aerospace segments performed particularly well, the company said.

In recent months, Kuehne+Nagel Air Logistics invested in its infrastructure for future growth. Among other things, the business unit opened a new air freight gateway at Paris Charles de Gaulle Airport with around 13,000 sqm of storage space and direct tarmac access.

Road Logistics

Net turnover of the business unit Road Logistics amounted to CHF 2.7 billion from CHF 3 billion, a 10% drop.

EBIT of CHF 119 million in the first nine months of 2023 slipped slightly by 1% from last year’s CHF 120 million.

Processed order volume was around 17.4 million.

The economic slowdown in core markets, especially in Europe, affected shipment volumes in the third quarter of 2023, the company said.

Kuehne+Nagel Road Logistics introduced a new offer to actively reduce greenhouse gas emissions from ground transportation. Customers can now reduce their carbon footprint by opting to use hydrogenated vegetable oil and, in the future, will also be able to do so by booking electric trucks.

Contract Logistics

Compared to the other business units, Contract Logistics performed well in the first three quarters of the year.

EBIT reached CHF 158 million from CHF 139 million or a 14% increase.

Net turnover was practically flat at CHF 3.62 billion from CHF 3.63 billion in 2022.

The conversion rate of 6.2% shows the positive effect of an improved business mix biased toward e-commerce and healthcare solutions, while maintaining an above market growth rate, the company said.

Kuehne+Nagel Contract Logistics achieved its ambitious sustainability target of producing more than 20% of its energy needs internally (e.g., through the deployment of photovoltaics). This target was achieved by September 2023 – nine months ahead of schedule.

RELATED READ: Kuehne+Nagel posts mixed bag of results in first half