Kuehne & Nagel on course for success
Kuehne & Nagel, the international provider of logistics services, has posted record sales which have filled its war chest to overbrimming. Thus it is in a position to invest in its European overland distribution network and in establishing its own organisation in China.
The annual accounts of Kuehne & Nagel International AG (KN), headquartered in Schindellegi (Switzerland), for 2003 were presented at a press conference held in Zurich at the end of March. KN’s executive chairman Klaus-Michael KUhne was in relaxed, it is not too much to say ebullient, form. His good humour was well justified for he presented a balance for 2003 that was nothing short of remarkable.
The lacklustre state of the European economy and the pitiless competition in the logistics industry did not prevent the company from posting a net profit of CHF 195.7 million (EUR 128 million). While it is true that in 2002, the internationally present transport and logistics group generated an operating profit of CHF 277 million, write-downs associated with the acquisition of Usco Logistics (USA), which was bought in 2001, prevented the group from making a profit. KN’s operating profit increased in 2003 by 14.1% to CHF 316 million and its net liquidity grew from CHF 271 million to CHF 433 million.
These results, underpinned by an equity ratio of 37.2%, demonstrate the financial strength of the company, commented KN’s chief financial officer Gerard van Kesteren. The company thus has around CHF 1.5 billion to play with for possible acquisitions.
Acquisitions in its sights
With the notable exception of Expeditors, KN is probably the only company in the industry that does not have to get by with an overdraft.
The company is projecting a rate of growth this year that is considerably above the market average and a renewed increase in sales. The projected rate of organic growth of flagship activities is very healthy (10 – 20% a year) and margins in KN’s contract logistics business are excellent.
KN’s strategic objective is the development of overland transport in Europe, notably in view of the extension of the EU. <> said Klaus Herms, president of the KN board.
Following the recent acquisition of Pracht, a medium-sized forwarding company, other acquisitions are planned in the next three years, starting this year.
After heavily investing in its contract logistics operations in Germany, specifically in new depots to replace existing facilities, KN now wants to invest in other markets such as in Central and Eastern Europe. The company suffered heavy losses last year associated with launching new activities in Italy.
KN is proposing the creation of a wholly owned subsidiary in China with its own organisation so that it is in a position to offer its international clients high quality services in this market, too, explained Kuhne. KN has already submitted an application for an A-license.
As last year, the partnership with SembCorp Logistics Ltd, Singapore, is still under review. However, KUhne believes that there will be no change in the status of the crossshareholdings even after the expiry of the retention period on December 31, 2005. In the event of an increase in capitalisation (which by the way is not planned at present), he would not increase
his holding in that company, meaning that the number of tradeable shares would increase.
Sales growing
The group’s consolidated sales increased last year by 8.4% to CHF 9.5 billion. This growth is above all attributable to the traditional strengths in air- and seafreight. The result for contract logistics, which
was something of a problem child, is improving strongly. Herms says that KN’s warehouses in the USA are busy and that their management had been rationalised. Last year, 34% of gross receipts were realised in America, notably due to the recovery in contract logistics and the remarkable strength in forwarding activities from the USA and Canada.
In 2003, th
