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Oct 22, 2020 at 5:30 PMThe Kühne+Nagel Group was able to significantly improve its key operational figures. In particular, stringent cost management ultimately led to growth in results. The group is also poised for the distribution of Covid-19 vaccines.
(Hamburg/Schindellegi) – The Kühne+Nagel Group demonstrated profitable growth once again in the third quarter of 2020, following a first half heavily impacted by the coronavirus pandemic. Adjusted for exchange rates, the company was able to significantly improve its key operational figures in the third quarter.
| Kühne+Nagel Group, CHF million | 9M 2020 | 9M 2019 | Δ | Q3 2020 | Q3 2019 | Δ |
| Net revenue | 14,839 | 15,838 | -6.3% | 5,031 | 5,238 | -4.0% |
| Gross profit | 5,516 | 5,989 | -7.9% | 1,866 | 1,974 | -5.5% |
| Operating profit (EBITDA) | 1,399 | 1,341 | 4.3% | 600 | 472 | 27.1% |
| EBIT | 790 | 794 | -0.5% | 371 | 283 | 31.1% |
| Net profit | 575 | 598 | -3.8% | 266 | 214 | 24.3% |
| Free Cash Flow | 811 | 617 | 31.4% | 428 | 254 | 68.5% |
The Kühne+Nagel Group demonstrated profitable growth once again in the third quarter of 2020, following a first half heavily impacted by the coronavirus pandemic. Adjusted for exchange rates, the company was able to significantly improve its key operational figures in the third quarter. Net revenue for the first nine months was CHF 14.8 billion, and EBIT was CHF 790 million. Currency fluctuations had a significantly negative effect in the first nine months, both on net revenue (-5.7%) and EBIT (-5.9%). Free Cash Flow increased by 31.4% in the first nine months.
CEO Dr. Detlef Trefzger – © Kühne+Nagel Group
Dr. Detlef Trefzger, CEO of Kühne + Nagel International AG, states: “With our motivated team, we are ready for further growth, together with our customers, particularly in the areas of Pharma & Healthcare and E-Commerce. Although we expect significant uncertainties in the coming months, we are well prepared.”
Kühne+Nagel is ready for the distribution of Covid-19 vaccines
- Kühne+Nagel is prepared to ensure distribution services for Covid-19 vaccines, test kits, and other aid materials
- The foundation for this is the multimodal Pharma & Healthcare network with over 230 certified locations worldwide
- Initial contracts related to Covid-19 vaccine production have been signed in contract logistics
- Distribution via air freight and land transport is expected to commence in 2021 (subject to product approval)
- Currently, it is estimated that globally between 11 and 15 billion* vaccine doses will be needed (Seabury Consulting)
Sea Freight
| CHF million | 9M 2020 | 9M 2019 | Δ | Q3 2020 | Q3 2019 | Δ |
| Net revenue | 5,163 | 5,633 | -8.3% | 1,777 | 1,894 | -6.2% |
| Gross profit | 1,051 | 1,173 | -10.4% | 378 | 391 | -3.3% |
| EBIT | 304 | 357 | -14.8% | 137 | 122 | +12.3% |
The performance of the sea freight segment saw a very positive turnaround in the third quarter of 2020 compared to the first half. The improvement is attributed to the renewed demand from SME customers as well as the increase in imports to Europe and North America from Asia.
Container volume increased by 10.4% in the third quarter of 2020 compared to the second quarter, reaching 1.2 million TEU. The net revenue of the segment was nearly CHF 1.8 billion, and EBIT improved by 12.3% year-on-year to CHF 137 million. The gross profit margin (Conversion Rate) reached 36.2%.
Process optimization through local customer support (Customer Care Locations) and operational performance centers (Operational Care Centres) supported effective cost management and the strengthening of Kühne+Nagel’s leading market position.
Air Freight
| CHF million | 9M 2020 | 9M 2019 | Δ | Q3 2020 | Q3 2019 | Δ |
| Net revenue | 3,703 | 3,503 | 5.7% | 1,243 | 1,143 | 8.7% |
| Gross profit | 957 | 997 | -4.0% | 315 | 329 | -4.3% |
| EBIT | 350 | 263 | 33.1% | 169 | 89 | 89.9% |
| Comparable EBIT* | 287 | 263 | 9.1% | 106 | 89 | 19.1% |
*adjusted for a positive one-time effect of CHF 63 million in Q3 2020 from the early settlement of the contingent purchase price of an acquisition in 2018.
Improved conditions in the third quarter of 2020, particularly in the automotive sector and for perishable goods, led to higher volumes in air freight compared to the previous quarter. Crisis goods, on the other hand, increasingly shifted to alternative transport routes. With 354,000 tons, air freight volume in the third quarter was 12.8% below the previous year’s period, while net revenue increased by 8.7% to CHF 1.2 billion and EBIT improved by 89.9% to CHF 169 million. This includes a positive one-time effect of net CHF 63 million from the release of the contingent purchase price provision upon the full settlement of an acquisition from 2018.
In September 2020, the air freight division opened new pharma hubs in Brussels and Johannesburg with direct access to the runway. By enabling even faster handling of goods and ensuring product integrity, significant added value is provided to customers, especially for temperature-sensitive vaccines.
Land Transport
| CHF million | 9M 2020 | 9M 2019 | Δ | Q3 2020 | Q3 2019 | Δ |
| Net revenue | 2,380 | 2,682 | -11.3% | 796 | 862 | -7.7% |
| Gross profit | 812 | 846 | -4.0% | 274 | 269 | 1.9% |
| EBIT | 38 | 62 | -38.7% | 12 | 17 | -29.4% |
The third quarter of 2020 was characterized by a significant increase in shipment numbers compared to the previous quarter in the land transport segment. In particular, the demand for national transport capacities in Europe was at pre-crisis levels. In North America, demand for all product segments – with the exception of Pharma & Healthcare and E-Commerce – remained significantly below the previous year; however, a first market recovery has been noticeable since September.
Net revenue for the segment fell to CHF 796 million in the third quarter, and EBIT decreased to CHF 12 million. The continued very weak demand for expo and event logistics had a significantly negative impact on results.
Kühne+Nagel is preparing – together with its customers – for future customs clearance (export and import) between the EU and the United Kingdom with a digital solution (Your Easy Brexit Solution).
Contract Logistics
| CHF million | 9M 2020 | 9M 2019 | Δ | Q3 2020 | Q3 2019 | Δ |
| Net revenue | 3,593 | 4,020 | -10.6% | 1,215 | 1,339 | -9.3% |
| Gross profit | 2,696 | 2,973 | -9.3% | 899 | 985 | -8.7% |
| EBIT | 98 | 112 | -12.5% | 53 | 55 | -3.6% |
Market share gains in Pharma & Healthcare services and in E-Commerce fulfillment, along with stringent cost management, led to a significant improvement in results in contract logistics in the third quarter of 2020 compared to the second quarter.
Net revenue for the segment was CHF 1.2 billion in the third quarter, and EBIT was CHF 53 million. Adjusted for extraordinary income in the third quarters of 2019 and 2020 from property sales amounting to CHF 21 million and CHF 4 million, respectively, EBIT increased by 44%.
The segment continues to expand its E-Commerce fulfillment capabilities. In Sweden, for example, Kühne+Nagel will operate a new distribution center for Amazon.
Photo: © Kühne+Nagel Group
