Finance Report: Kuehne & Nagel, Danzas & Panalpina register record results
Panalpina Fischer emphasised the company’s independence at his annual press conference in Zurich: “Our shareholder [the Ernst Gohner Foundation] is dosely watching potential alliances but regards the recent concentration and acquisition euphoria in logistics as a thing of the past.”
In this context Fischer welcomed the fact that SairLogistics had sold back its 10% stake in Panalpina and 45% share of SwissGlobalCargo back to Goihner and Panalpina (Airtrade, May). “This gives us back our entrepreneurial freedom: we no longer have to consider minority interests.” He added; “When we decided to get out, we did not know where SAirGroup (now Swissair Group) was going”.
Panalpina CEO Bruno Sidler acknowledged that a joint venture was perhaps not the ideal construction for a vertical integration forwarder/passenger carrier but maintained that “such an alliance can work with a joint bottom line – and a major effort from both sides”.
Panalpina will remain a preferred partner of Swisscargo. The former joint venture SwissGlobalCargo remains Panalpina’s in-house air carrier but may adopt another name without a Swiss connection. “This is somewhat misleading as we achieve only 2% of our turnover in Switzerland,” Fischer conceded.
Panalpina competitor Danzas took the lead among air freight forwarders by acquiring AET. But this does not shake Panalpina: “Our plans are different. We want to grow our transportation network organically,” Sidler declared. Regarding the gaps in Panalpina’s coverage, he pointed to the co-operation agreements with MT Worldwide Logistics in the US and Safror and Renfreight in South Africa. “This is how we fill these gaps. With AIT we now develop door-to-door concepts and supply chain management solutions in the US, and Africa we are now the market leader,” he said.
Sidler denied any further plans for acquisitions “although we keep our radar switched on and talk to a lot of people”. Fischer added that taking shares is not a prerequisite for a successful co-operation, but in turn does not excludes a capital participation later “This way you know at least with whom you are going to bed,” he said. “Some mergers have not brought about the desired results. We are, in contrast to others, not condemned to realising synergies whatever the cost. Instead, Panalpina can concentrate on its business and its customers”.
Asked about a possible IPO, Fischer said: “Our shareholder shares my idea that an early IPO is unnecessary We are in a fortunate position and can determine the timetable of an IPO ourselves.” He declined to detail the weight of Panalpina’s war chest, but expressed gratitude towards the foundation “which allows us to reinvest most of our profits”. The (Gohner Foundation gets paid a an unchanged dividend of 10% or CHF1Om ($5.75m) out of a total Panalpina Holding profit of CHF25.9m ($14.8m). CFO Werner Regh said Panalpina invested some CHF45m ($25.8m) in 2000, CHF3Om ($17.25m) of which went into IT.
Sidler also announced that the company will aggressively promote its time-definite products for heavy air freight. “The markets embraced our ‘aIl.in’ products. We are continuously expanding their catcbment area between Europe and North America, Brazil, South Africa, Japan, Singapore and China. Around 20% of our air traffic is now time-definite. Within two years we want to boost this to 75%.”
Panalpina does not want to take on integrators like UPS, FedEx or DHL this way, Sidler said. “We have our time-definite products for ‘hard’ air freight – that’s why we call ourselves an integrated forwarder. But the big
majority of our business is still in good old freight forwarding and this is also where we make our money.”
Both Fischer and Sidler confirmed that Panalpina strives to increase its operational margin of 3.4% (EBITDA as a percentage of net revenues). Low margins are a problem common to Swiss forwarders, the exception being Kuehne & Nagel whose profitability has for years been above average. Unfo
