[040317.EN.BIZ] Panalpina Profit Slides 40.7pc to US$51.7 Million As Revenue Sinks 11pc

SWISS forwarding giant Panalpina posted a 2016 consolidated profit that declined 40.7 per cent year on year to CHF52.3 million (US$51.7 million), drawn on revenues of CHF5.19 billion, which fell 11 per cent.

Fourth quarter profit was 69 per cent lower year on year to CHF5.8 million, drawn quarterly revenues of CHF1.33 billion, down 7.8 per cent.

Despite lacklustre result Panalpina expects the air and ocean freight markets to grow two per cent in 2017.

While Panalpina posted its highest air freight volume since 2007, gross profit margins in both air and ocean freight came under pressure in 2016, said the firm's statement accompanying the results.

This resulted in lower full-year earnings. Adjusted for restructuring expenses of CHF28 million, EBIT reached CHF109.9 million (-6.3 per cent) and adjusted consolidated profit came in at CHF80.2 million (-9.1 per cent) in 2016.

Said Panalpina CEO Stefan Karlen: "Much lower volumes from the oil and gas sector meant that we had to restructure that part of our business during the first half-year.

"In the second half, the Hanjin collapse and the very busy air freight peak season led to tight capacities and soaring rates which put strong pressure on our margins," he said.

"While we continued to perform well on volumes, pressure on yields impacted our profits," Mr Karlen said.

Air freight volumes increased 10 per cent (four per cent organic growth) in 2016, in a market that grew by an estimated one to two per cent, said the company.

The air freight industry had the busiest peak season since 2008 and Panalpina recorded the highest air freight volumes since 2007. The company flew 921,400 tons last year (2015: 836,200 tons).

But profit per ton decreased 7.5 per cent to CHF646 (2015: CHF 699), resulting in a total profit of CHF595.2 million (2015: CHF 584.1 million).

Ocean freight decreased seven per cent year-on-year, but increased from quarter to quarter as the year progressed. The market grew by an estimated one per cent in 2016. Panalpina moved 1,488,500 TEU in 2016 (2015: 1,593,900 TEU).

When carriers tightened capacity following the Hanjin collapse in August, rates went up and margins came under pressure, Panalpina said.

Gross profit per TEU of ocean freight decreased slightly by 1.1 per cent to CHF298 (2015: CHF301), resulting in a gross profit overall of CHF443.8 million (2015: CHF480.4 million).

Said Mr Karlen: "Despite 2017 being a year of great political and macroeconomic uncertainties, we are keeping to our long-term goals and are confident that we can maintain stable costs to position the business for volume growth."

Source : HKSG.