Semblog/Kuehne & Nagel partnership terminated

As widely expected, the partnership between Semblog and Kuehne & Nagel has been terminated over a year early. The parties released a joint statement saying that the ‘co-operation had not met expectations’. The agreement, which was due to expire in December 2005, was underpinned by a joint shareholding which will now have to be unwound. 7% of Semblog’s 20% holding in K&N will be retained by Kuehne & Nagel International, and 13% placed with institutional investors. K&N will sell its 5% holding of Semblog.

One of the major problems with the agreement, according to K&N, was that it didn’t allow the company to develop its presence in the fast growing Chinese market as quickly as it would like. Earlier in the year it was awarded a Class A licence by the Chinese authorities, allowing it to establish wholly owned operations. However it was bound by an agreement with Semblog, which has its own Chinese subsidiary, not to compete in the contract logistics sector.

Semblog’s income from selling the shares will be CHF 974.4 million (€632m) on an original stake of S$ 637 million (€306m). Under four years, including dividend income, this investment has yielded shareholders a total return from investment of about 110%. Previously Semblog’s management had stated that it had every intention of holding K&N to the terms of the original agreement. However statements made by K&N’s CEO Klaus Michael Kuehne, as well as the company’s new relationship with Japanese forwarder Kintetsu, suggest that K&N was the force behind the change.

Separately K&N has released details of its trading in the third quarter of its financial year. Its results show the strength of the market in which it operates, with a 20.8% jump in turnover to CHF 8,392.3 million (€5,450m) compared with the same period of the previous year. Operating profits (EBITA) increased by 33.4% to CHF 283.3 million (€184m).