Panalpina signals its strengths
The IT platform is paying off, the airfreight division is growing and the sea freight unit achieving the turnaround. The Swiss logistics company had a good last year. The uncertainties and disturbances in the wings seem to be boosting day-to-day business. It remains to be seen whether it will continue with its success under more difficult market conditions too.
Panalpina has not experienced a dearth of publicity recently. DSV’s takeover offer, possible cooperation with Agility, legal and strategic disputes between shareholders – all this put the Basel logistics group in the limelight (see also page 18 of ITJ 9-10 / 2019).
One result is that the company’s operational achievements, that is to say the hard facts of every-day business, were only addressed marginally during the recent turbulence. Now Panalpina has presented its results for 2018 and its outlook for this year – at its headquarters in Basel, for the first time in years.
Internal unity
CEO Stefan Karlen did not comment on the topics mentioned above, referring his audience to previous statements made by the company’s board of directors. However, the turbulence surrounding the company did have an impact on the inner workings of the firm, he admitted.
Karlen, who has worked for Panalpina since 1997, confirmed to the ITJ that his discussions with employees have given him “the impression that Panalpina has grown closer together as a result of recent developments. There has not been a direct impact on day-to-day business, however.” Karlen noted that experiencing such unrest is part and parcel of the risk of running a listed company.
In day-to-day business the company’s 13,000 employees achieved good results. Net sales rose by 9.1% to CHF 6.04 billion, and gross profits grew by 7.3% to CHF 1.5 billion. The group made a remarkable leap in net profits, which rose by 31.8% to CHF 75.7 million. As in the previous year, the dividend remained at CHF 3.75 per share.
Not surprisingly, Panalpina’s strength lies in its airfreight division. The company broke through the 1 million t barrier, an increase of 4% over the previous year. When the global airfreight market began to weaken towards the end of the year, Panalpina was still able to increase its tonnage, but its gross profit per tonne declined steadily. CFO Robert Erni commented that “after the capacity bottlenecks of 2017 the situation normalised and carriers lowered their prices; this also had an effect on us forwarders.”
Panalpina’s traditions include a degree of shying away from the waters – sea freight has been a problem child in recent years; but now a reversal of the trend seems to be on the horizon. Gross profit per teu reached the targeted CHF 300, and ebit was positive (just) in Q2 – Q4. In the end, ebit was still down by CHF 1.8 million and total volumes fell by around 2%.
Karlen was nevertheless satisfied. “We’re not quite where we want to be yet, but we’re on the right track.” His CFO agreed. “Profits are more important than volumes. We were able to keep costs low and earn more.”
This applied to the logistics field too, where Panalpina increased its ebit by 46% to CHF 11.9 million – a new record. The commissioning of new logistics centres in Singapore and Dubai was one important contributory factor.
New IT platform for customers
An important driver of the company’s overall success is the SAP TM IT system it operates, which now handles more than half of all shipments. By the end of the year, this figure should ideally reach 85%. CIO Ralf Morawietz said that “we now have a blueprint, and can scale the process as required.”
If SAP TM is implemented everywhere, Panalpina expects 15% higher productivity, with the same costs. The firm also plans to launch an IT platform for customers at the beginning of H2; it will improve administration, communication and pricing for clients when dealing with the corporation. “This will make dynamic prices possible, which is a pioneering move in this form,” as Karlen announced.
With the progress made in the IT field and the positive business figures, Panalpina’s management signalled its internal strengths in the face of external unrest. Panalpina thus seems more robust today than some might have thought. It remains open whether this might suffice to ensure independence in the long term.
