K+N air volumes shrink, but net earnings rise in Q1

Reflecting the general downturn of the airfreight market, first-quarter results from Kuehne + Nagel showed a 3.1% drop in air cargo volume to 409,000 tonnes, despite a 7.3% rise in gross profit and a modest  2.5% increase in earnings before interest and taxes (EBIT).

Describing the market as “declining,” K+N said the air unit “developed nearly in line with the overall airfreight market,” noting also that the Q1 figures are being compared to “significant increases in tonnage in the previous years.” EBIT for the air unit nevertheless reached US$78.4 million, which K+N said was “almost consistent” with the Q1 of the previous year.

“The market-related volume decline in airfreight was largely offset by active cost management,” K+N said. “The result of contract logistics decreased due to ongoing restructuring and review of the project portfolio. Overall, the group achieved a good result.”

During the quarter, the Group integrated the business operations of Quick International Courier, a time-critical transportation and logistics service for the pharmaceutical and healthcare and industries, which contributed to “a significant increase in gross margin.”

“Kuehne + Nagel got off to a good start in 2019,” said CEO Detlef Trefzger. “Once again, we increased our net turnover, gross profit and EBIT. However, we find ourselves in an environment in which global economic growth is noticeably slowing. In this volatile market environment, we are well positioned.”

The Overland business performed much better with a 6% net turnover increase and an 8% rise in Q1 gross profit, year-over-year. Intermodal transport in North America, K+N said, saw some “significant new business” during the quarter, with the development of digital platforms and expansions in the European pharma trailer fleet

Meanwhile, Contract Logistics saw gross profits increase by 4.9%, y-o-y, during Q1, which involved the rollout of a new global warehouse management system that was initiated in 2018 and continued into Q1.

In terms of seafreight, K+N saw a 6.2 percent growth in volume for the quarter, reaching 1.15 million standard containers (TEU), or nearly 70,000 units more than in the previous year’s Q1. The forwarder cited “a double-digit volume increase of Asian exports to North America and Europe” for the increase, producing an EBIT of $109.8 million.