The Swiss forwarder and logistics company Panalpina warned further weakening of air freight volumes will impact its profitability.
"After a weak July and an improvement in August, we expected our air
freight volumes to grow sequentially in September. However, compared to
August they came in much weaker than seasonally normal, especially on
Europe-related trade lanes,” said Monika Ribar, Panalpina's chief executive officer.
The company said it will release detailed financial results and an outlook on Nov. 2, but said preliminary figures show air freight volumes will be 8 percent lower and earnings before interest, taxes, depreciation and amortization will be between 15 and 20 million Swiss Francs (CHF) ($16 million to $21.5 million).
The third quarter of 2012 indicates that EBITDA for the Panalpina Group will come in between CHF 15 and 20 million, which already incorporates a one-off extraordinary charge of CHF 12 million due to staff reductions. In the third quarter of 2011, EBITDA was CHF 54.2 million.
In September, Panalpina said it recorded low air freight volumes.
"Substantial exposure to air freight and its most important market Europe left its mark on the company’s latest financial results," the forwarder said. "Panalpina saw significant volume decreases on most European trade lanes, both in import and export. Panalpina’s air freight division accounts for almost 50 percent of the company’s net forwarding revenue and around two-thirds of the air freight volumes come from trade lanes involving Europe.
"Compared to the previous year, particularly air freight volumes of major customers in key industries such as high-tech, telecom and chemicals decreased substantially in the third quarter. These three industries alone account for roughly 40 percent of Panalpina’s air freight volumes. On the upside, Panalpina shipped significantly more air freight for its customers in healthcare, oil and gas as well as manufacturing in Q3. The trend towards smaller shipments was accentuated. While the number of handled air freight files during the third quarter remained practically unchanged year-on-year, tonnage dropped by 8 percent."
“During the course of the third quarter it became evident that the expected volume recovery in air freight in the second half of 2012 would not materialize,” Ribar said.
While Panalpina began to adapt its workforce to the lower volume environment during the third quarter, the associated cost savings have not yet had a positive effect in that period. Operating expenses increased from the last quarter, partly because of provisions of around CHF 12 million in September for accrued salaries of staff leaving the company. The cost savings are expected to kick in during the fourth quarter.
Panalpina did have some good news on Monday, saying it has assumed responsibility for BMW's spare parts logistics operations in Brazil. The forwarder will run a new distribution center for the auto maker in that country.
The new warehouse, which has been set up exclusively for BMW's operations in the Brazilian market, opened on Oct. 1 and is located at Cajamar near São Paulo. - Chris Dupin