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Panalpina sees profits soar on record airfreight volumes

Panalpina reported revenue and profit increases last year on the back of record airfreight volumes, while it will continue to target “bolt-on” acquisitions.

The Switzerland-based freight forwarder saw 2017 revenues increase 6.5% year on year to Sfr5.5bn, while earnings before interest and tax (ebit) climbed 26.1% to Sfr103m and profits were up 9.9% to Sfr57m.

The company said improvements were driven by its airfreight division, which saw full-year volumes increase in line with the market at 8% to 995,900 tons.

Revenues for the division were up 11.1% to Sfr2.9bn and ebit improved 36.6% to Sfr110m. Moves to secure air capacity early helped mitigate space shortages later on in the year, the company said.

One negative for the air business was that its gross profits per ton decreased by 1% year on year. Forwarders reported a lag in passing airfreight prices increases through to customers earlier on in the year.

The volume improvement also lagged behind the 20.4% increase reported by Kuehne+Nagel.

Panalpina chief executive Stefan Karlen said: “2017 ended with record high volumes and profitability in airfreight. We secured extra capacity early on in the year, well ahead of the exceptionally strong peak season when global capacity became scarce.

“Consequently, we were able to serve our customers in a very challenging market where others failed.”

“In ocean freight, we kept volumes stable throughout the year, but as margin pressure continued into the fourth quarter, a full-year loss resulted for that part of our business.

“All in all, 2017 demonstrated Panalpina’s robustness as we continued to go through a period of transformation and disciplined strategy execution.”

The volume improvement also reflects acquisitions: at the end of last year the company announced plans to buy Belgium-based perishables specialists Adelantex and AD Handling, while in September it purchased Cool Chain Group in Germany, and Interfresh Airfreight Handling in the Netherlands.

In the same month the company was also given approval by regulators for its takeover of Kenya’s Air Connection.

Looking ahead the company seems set to continue on the acquisition trail with its results presentation stating that one of its priorities is to “accelerate growth through selected bolt-on acquisitions”.

Karlen added that the company would look to continue to develop its value-added services.

“The fact that all relevant economic indices are trending upwards makes us reasonably confident for 2018,” said Karlen.

“We have made solid progress in airfreight and reached a good cruising altitude on which we can build and that will allow us to reach the targeted conversion ratio in due course.

“In ocean freight, we know what needs to be done to make it into calmer waters again and in Logistics, the focus remains on top-line growth by further expanding our offering of value-added services.”

The company expects air volumes to increase by 3-4% this year.

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