Geodis performance improves, but challenges remain
Once struggling French logistics provider, Geodis, has reported a much stronger performance in the first half of 2004. The company’s net income rose by 5% to €1,667.4m compared with €1,587.7m the year before. Year-on-year operating profits grew by 60%, to €36.8m from €23m.
Management put the increase in revenues down to the number of new contracts won over the past year. Figures were also helped by the fact that there were three extra working days in France compared with the period in 2003. However growth at an international level (+6.9%) remained higher than that recorded in France (+5.2%), suggesting that the French market is still lagging some way behind other countries in terms of economic upturn. Indeed management stated an economic recovery was not behind the improvement in its overall performance.
The increase in margins which Geodis experienced was attributed to commercial development and continued restructuring of loss-making businesses, cost control and consolidation of the customer portfolio. Despite uncertainty over such external factors as oil prices, the company described its situation as ‘upbeat’.
Although Geodis has enjoyed a turnaround in its fortunes since the start of 2003, it still has a number of challenges. Its operating margin of 2.2% is low compared with many other logistics providers and management plans to increase this to 3% in 2005/6. It has also experienced problems in the domestic distribution branch of its Italian division. An operating loss of €7.8m in the first half means that the Italian division is not expected to break even before 2006.
Overall it can be said that Geodis’ high level of exposure to the French market has held back its progress in recent years. To lessen this risk in the medium term it is believed that the company is looking for an international partner. The company already collaborates with German forwarding company Rohde & Liesenfeld.
