Kühne + Nagel Group reports significant decline in the first quarter of 2020

The Kühne + Nagel Group felt the impact of the coronavirus crisis in the first quarter of 2020, recording significant declines across all divisions. However, the group has a stable cash flow and solid liquidity.

(Schindellegi) As a result of the coronavirus pandemic, business volume in the first quarter of 2020 decreased sharply. The net revenue, gross profit, and results of the Kühne + Nagel Group were significantly below the previous year’s levels. Additionally, currency fluctuations had a notably negative impact.

Dr. Detlef Trefzger, CEO of Kühne + Nagel International AG: “The coronavirus pandemic is an immense global challenge, also for Kühne + Nagel. Industrial production and trade volume have weakened significantly. In this situation, Kühne + Nagel was able to maintain its operational performance, closely manage a number of specialized businesses, and acquire new customers. The transport volume for raw materials and pharmaceuticals was maintained at a respectable level. Our company faces significant challenges in the coming months, but is well positioned given its customer proximity, agility, and digital offerings. High liquidity characterizes the company’s solid financial strength.”

Sea Logistics

With a significant double-digit decline in volume demand from and to China, the Sea Logistics division was early affected by the impacts of the coronavirus crisis. On the other hand, reefer transports (including pharmaceuticals) and export volumes from Latin America (especially perishable goods) performed well. In the first quarter, 1.075 million standard containers (TEU) were transported, which is 71,000 units fewer than in the previous year (-6.2%).

Consequently, the net revenue of the division decreased by 6.9% to CHF 1.7 billion, and gross profit fell by 9.9% to CHF 344 million. EBIT decreased by 29.5% to CHF 79 million. Currency effects negatively impacted 5.3% (net revenue) and 3.6% (EBIT).

Even in the current environment, customer interest in CO2-neutral Sea Logistics solutions remained high. Under Kühne + Nagel’s Net Zero Carbon program, all CO2 emissions from less than container loads (LCL) have been offset since the beginning of the year.

Air Logistics

The Air Logistics division was particularly affected by the coronavirus pandemic starting in March, when numerous passenger flights were canceled on the supply side. Global air freight capacity decreased by around 60% within a few weeks. On the demand side, lockdowns in China, Europe, and eventually America led to a sharp decline in consumption, resulting in lower air freight volumes. In contrast, short-term charter solutions for pharmaceuticals and time-sensitive transports were in higher demand.

Air freight volume in the first quarter was 372,000 tons, which is 9% lower than the same period last year. The decline in net revenue was less pronounced at 6.8% to CHF 1.1 billion, and gross profit decreased by 5.8% to CHF 307 million. EBIT fell by 11.3% to CHF 71 million. Currency effects negatively impacted both net revenue and EBIT by 5.0%.

Significant progress has been made in implementing the company’s own Transport Management Solution AirLOG and other digital platforms.

Road Logistics

The Road Logistics division started the new business year solidly. However, from March onwards, volume in Europe (particularly France, the UK, and Italy) and North America (mainly in intermodal business) declined significantly. All sectors were affected, except for e-commerce and pharmaceuticals.

In the first quarter of 2020, the net revenue of the division decreased by 4.2% to CHF 863 million, and gross profit fell by 1.4% to CHF 281 million. EBIT decreased to CHF 17 million. Currency effects negatively impacted net revenue by 4.8% and EBIT by 4.2%.

In Europe, the two acquisitions Rotra (Belgium and the Netherlands) and Joebstl (Austria and Eastern Europe) were integrated as planned. The development in Asia remained encouraging: Kühne + Nagel reports increased demand for its digital platform solution eTrucknow.

Contract Logistics

In the Contract Logistics division, the supply of automotive production and retail was particularly affected by the impacts of the coronavirus. However, demand for essential goods, pharmaceuticals, and e-commerce services increased.

In the first quarter of 2020, the net revenue of the division decreased by 6.1% to CHF 1.2 billion compared to the same period last year, gross profit fell by 4.0% to CHF 946 million, and EBIT decreased by 34.6% to CHF 17 million. Currency effects negatively impacted net revenue by 4.9% and EBIT by 3.8%.

The environment required a rapid and comprehensive adjustment of resources, supported by further progress in restructuring contract logistics. Throughout the quarter, 90% of all Kühne + Nagel distribution centers worldwide operated without interruption.

About Kühne + Nagel

With over 83,000 employees at nearly 1,400 locations in more than 100 countries, the Kühne + Nagel Group is one of the world’s leading logistics companies. Its strong market position lies in sea, air, road, and contract logistics with a clear focus on integrated logistics solutions.

Photo: Kühne + Nagel

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