Panalpina recorded robust airfreight volume growth of seven per cent in the first half-year (1H) of 2017, but it says “higher freight rates and margin pressure persisted in a continuously challenging market environment”.
The freight forwarder volumes reached 473,100 tonnes in the six months, which was largely driven by the strong growth of Far East trade lanes and up on the 441,200 tonnes in the same period last year. In the first quarter it handled 233,000 tonnes (up eight per cent) and 240,000 tonnes (up seven per cent) in the second quarter.
Panalpina says there was a slightly improve unit profitability quarter-on-quarter despite higher airfreight rates as high demand for airfreight capacity pushed up rates, which put margins under continued pressure.
The forwarder says the seven per cent rise in volumes in the first half of 2017 was in line with an estimated market growth of about eight per cent.
Gross profit per tonne decreased 10 per cent to 623 Swiss Francs (CHF) ($650) (1H 2016: CHF 690), resulting in a gross profit overall of CHF 294.6 million (1H 2016: CHF 304.5 million)
Reported earning before interest and tax (EBIT) in airfreight increased from CHF 33.1 million (adjusted 1H 2016: CHF 45.7 million) to CHF 39.1 million. The reported EBIT-to-gross-profit margin for the first half of 2017 came in at 13.3 per cent compared to 10.9 per cent (adjusted 1H 2016: 15 per cent) a year before.
Panalpina’s total net forwarding revenue for the six months was CHF 2,632 million, up on the CHF 2,596 million last year.
Panalpina increased its total reported EBIT from 34.7 million (adjusted half-year 2016: CHF 60.8 million) to CHF 42 million and the reported consolidated profit from CHF 21.8 million (adjusted 1H 2016: 47.9 million) to CHF 29.9 million for January to June 2017.
Panalpina chief executive officer, Stefan Karlen (pictured) says: “Thanks to strict cost management we improved EBIT quarter-on-quarter in the first half-year of 2017 and restored profitability in ccean freight in the second quarter.
“With the successful implementation of our new IT system in the key market Germany, we also gained further momentum in our operations transformation program.”
As for the outlook, Karlen says: “We expect ocean carriers and airlines to be much more disciplined than in previous years in managing transport capacity and sustaining freight rates.
“While we are confident that we can improve unit profitability in ocean freight in the second half of the year, unit profitability in airfreight will remain under pressure.
“We will therefore concentrate on what we can influence directly: controlling cost very effectively and pushing ahead with our operations transformation program.”