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Kuehne + Nagel Group – Nine-months 2009 results

Dual strategy proves effective
Schindellegi / CH, October 20, 2009 – The worldwide operating Kuehne + Nagel Group achieved very satisfactory results for the first nine months of the year due to the early, consistent implementation of its dual strategy of strict cost management and commitment to market-share expansion. Gross profit – the relevant indicator of a logistics provider’s volume and margin performance – was 7.3 per cent (currency-adjusted and excluding acquisitions: 4.5 per cent) below the figure of the previous year’s period. Operational result (EBITDA) decreased by 10.0 per cent (adjusted: by 8.2 per cent) and net earnings by 14.4 per cent (adjusted: by 6.4 per cent) to CHF 387 million.
During the first half of the year, the international seafreight market was characterised by significant volume declines; the third quarter, however, saw the first signs of recovery. Leveraging its broad geographic reach and its value-adding product portfolio, Kuehne + Nagel was able to expand market shares in almost all trade lanes. Volumes handled by Kuehne + Nagel increased by 11 per cent from second to third quarter. Compared with the first nine months of last year, the decrease was 8.5 per cent while the overall market declined 16 per cent. As a result of the early adaption of cost structures, the operational result declined just 9.5 per cent compared to the previous year’s period. EBITDA margin was at 5.3 per cent (previous year: 4.4 per cent) despite margin pressure due to rate increases in the third quarter.
The international airfreight market saw a slight improvement in tonnages in the third quarter; therefore, overall cargo decrease slowed to 17 per cent in the first nine months of the year. Kuehne + Nagel increased its market share by intensifying sales activities and expanding its industry-specific solutions. Compared with the second quarter, Kuehne + Nagel increased tonnage by 7 per cent in the third quarter. For the nine months, Kuehne + Nagel’s tonnage decline of 15.5 per cent was less than the overall market decline. Operational result decreased by 16.6 per cent compared with the previous year’s period, while EBITDA margin, despite the third quarter’s rate increases, improved from 5.8 to 6.9 per cent.
Road & Rail Logistics
The European road transport market suffered substantial volume declines during the past nine months, especially in August, when business was impacted by the recession-related holiday prolongation by shippers. Never-theless Kuehne + Nagel was able to considerably improve results compared with the previous year, mainly due to the acquisition of the French Alloin Group, further standardisation of processes as well as improved network utilisation. EBITDA margin went up from 1.0 to 1.8 per cent and operational result increased by 50 per cent compared to the previous year’s period.
In order to strengthen the European market position and to optimise operatio-nal synergies, national and international overland traffic and contract logistics-related distribution activities will be consolidated under the responsibility of Management Board member Dirk Reich as of January 1, 2010. Management Board member Xavier Urbain, who has significantly contributed to the successful expansion of the Group’s overland business, will terminate his operational responsibility with Kuehne + Nagel International AG on December 31, 2009, and will continue to support the Company’s growth strategy on a consultancy basis.
Contract Logistics
While the contract logistics market continued to stabilise on first half-year level, for the first nine months the business unit’s operational result was still 17 per cent below the previous year. Strict cost control and new business implementation kept the third-quarter operational result nearly level with the second quarter. EBITDA margin decreased only slightly from 5.1 to 4.7 per cent.
Reinhard Lange, CEO of Kuehne + Nagel International AG, said: “We are reasonably satisfied with our results for the first nine months. Our dual strategy has proven effective – we have successfully counteracted substantial volume declines through strict cost management and increased sales activities. As a result, we have continuously expanded our market share and over-proportionately benefited from the third quarter’s business stimulation.“