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Kuehne+Nagel Group saw high profitability in the first quarter despite volume fall amid geopolitical and inflation-related challenges worldwide
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The supply chain environment normalized rapidly after exceptional situation in 2021 and 2022
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Focus is on cost control by leveraging the asset-light model
Kuehne+Nagel Group saw a solid first quarter despite volume fall amid geopolitical and inflation-related challenges worldwide that marked the start of 2023 and the rapid normalizing of the supply chain environment after the 2021-2022 boom years.
The Swiss logistics giant said demand for transport services fell as expected, but the COVID-related special economic situation distorts comparison with the previous year.
In the context of a normal business environment and compared with its pre-pandemic Q1 performance, the company said the first quarter of 2023 delivered a record result.
Net turnover for first-quarter 2023 was Swiss francs (CHF) 6.7 billion (US$7.54 billion), earnings before interest and tax (EBIT) reached CHF 612 million and net earnings totaled CHF 462 million. The conversion rate, which describes the ratio of EBIT to the group’s gross profit, remained at a high level of 26%.
“The macroeconomic environment remained extremely challenging at the start of 2023. This does not come as a surprise as signs of significant weakening emerged last autumn, following the period of extraordinary, pandemic-related demand for logistics services,” said Stefan Paul, chief executive of Kuehne+Nagel International AG.
“With our focus on cost control through consistent exploitation of the asset-light model, the Kuehne+Nagel Group was able to hold its own in this environment and expand its market share worldwide. We already see early successes from the strategic Roadmap 2026 presented in March.”
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Net turnover of the sea logistics business in the first quarter of 2023 was CHF 2.7 billion and EBIT totaled CHF 344 million. The conversion rate stayed at a high 50%. Container volume was 987,000 twenty-foot equivalent units (TEUs) during the period.
Kuehne+Nagel sea logistics made significant market share gains, establishing its leadership on the transpacific route for the first time.
Net turnover of the air logistics unit was CHF 1.9 billion and EBIT was CHF 154 million. The conversion rate was 32%. Air freight volume was 475,000 tons in the first quarter. In a declining air freight market, Kuehne+Nagel had a stable market share while gaining share in areas such as the transport of perishable goods.
As part of a long-term charter agreement with Atlas Air, Kuehne+Nagel took delivery in Seattle of the last Boeing 747 ever produced in February. The jumbo jet will be used primarily for freight on the transpacific route for Kuehne+Nagel’s subsidiary Apex Logistics.
Road logistics had net turnover of CHF 956 million and EBIT of CHF 52 million. Around 6 million orders were processed in the first quarter. The networks were well utilized, enabling the unit to post a record quarterly result.
In March, Kuehne+Nagel put its first 23 electric trucks into operation in France. They will be used primarily in urban environments.
Contract logistics posted net turnover of CHF 1.3 billion with EBIT of CHF 62 million. The focus on high-value-added customer segments and the high utilization of warehouse space again led to an increase in profitability to a new record level.
With the opening of a new distribution center for French sporting goods retailer Decathlon, the business unit expanded its logistics capacity by around 30% for this customer in Latin America. The new facility in Chile has state-of-the-art robotics for omnichannel picking.
