recorded a market-beating 5% increase in airfreight volumes during the
first quarter of the year as it counteracted a tough oil and gas market
but pre-tax earnings declined.
The Switzerland-based freight forwarder recorded first-quarter air
cargo volumes of 216,000 tons compared with 205,000 tons for the same
period in 2015. It said the air cargo market had shrunk by around 3%
during the period.
In contrast, Switzerland-based rival Kuehne+Nagel reported a small drop in airfreight demand for the period.
“While volumes contracted substantially in oil and gas they grew in all other industries including perishables,” it said.
The west coast seaport strikes experienced last year would have also
given the overall market a one-off boost in 2015 and effected
In November last year, it also acquired perishable forwarder AirFlo which contributed to the volume growth.
While volumes increased, airfreight revenues experienced a decline, dropping by 5.4% year on year to Sfr744m.
Airfreight gross profit for the period increased by 0.4% year on year
to Sfr149m, while earnings before interest and tax (ebit) dropped by
27.4% on last year to Sfr17.8m.
It said profitability was affected by lower gross profits in the oil
and gas business, an area where it has traditionally been strong. The
oil and gas business accounts for around 15-20% of overall gross profits
at the company.
Revenues are also likely to have been affected by lower pricing in the air cargo industry.
Looking ahead, the forwarder expects the airfreight market to remain
flat while its volumes are expected to end up around 5% higher than the
previous year, taking into account the AirFlo acquisition.
The overall company saw slight declines in profits and revenues but
it was keen to point out it had managed to counteract the tough
conditions in the oil and gas market.
Total first quarter revenues declined by 13% year on year to
Sfr1.3bn, ebit was down by 5.1% to Sfr24m and net profit fell 11.7% to
Ocean volumes declined while shipping rates during the period also came under pressure.
Panalpina chief executive Peter Ulber said: “In the first three
months of the year, we succeeded in counterbalancing the lower transport
volumes in oil and gas.
“This was due to the positive development in the rest of the business as well as the fast adjustment of our cost base.
“The results reflect our changing business mix. While the contraction
in oil and gas continued, we saw growth in all the other industries
that we serve.”
Looking ahead, he said: “The tough comparison due to the decline in
the oil and gas business will remain for the second quarter of the year,
but we have shown that we can continue to be profitable and ride out
“Regardless of the current market situation, servicing our oil and
gas customers remains a core offering of Panalpina, and with our
in-house transport engineering department and projects expertise we can
provide unique solutions for the sector.
“At the same time, we will continue to balance our business and product mix throughout the year.”
The company said it is also on-track to implement its new forwarding
software, which it hopes will make the organisation more efficient.
The new system supports the implementation of standard global
processes for air and ocean freight and replaces the company’s legacy
By the end of the year, it hopes to have migrated around 50% of its network to the new system.
News Source: http://www.aircargonews.net