K+N aims for efficiency boost from regional streamlining

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Kuehne + Nagel is to merge its North West Europe, Central Europe and Southwest Europe regions to create a single West Europe organisation based in Hamburg.

Chairman Karl Gernandt said: “The realignment of the regional structure is part of a comprehensive catalogue of measures to increase efficiency; also the processes of the Human Resources and Finance functions will be streamlined and optimised.”

The group reported a 5.9 per cent rise in sales to CHF 20,753m for 2012, although operating profit was down 5.8 per cent to CHF 921m.

At the same time it has announced that Reinhard Lange is to step down as chief executive officer Kuehne + Nagel Group for health reasons from 7th May.

A management team led by chairman Karl Gernandt will take over Lange’s tasks until a replacement is found. The team will consist of business unit heads Hans-Otto Schacht (Seafreight), Tim Scharwath (Airfreight), Stefan Paul (Road & Rail Logistics) and Dr Detlef Trefzger (Contract Logistics).

[asset_ref id=”1942″] Reinhard Lange

A key priority will be the regional reorganisation. As well as the West Europe consolidation, the regional units Middle East, Central Asia and Africa will be consolidated into a new Middle East and Africa region.

A new North Asia group will consist of China, Hong Kong Taiwan and Macau. A new South Asia Group will consist of South Asian countries plus South Korea and Japan.

The East Europe region based in Vienna remains unchanged, as do the North and South America regions.

In contract logistics, the group said that 2012 had been characterised by demand fluctuation, regional variations in warehouse capacity utilisation and significant pressure on prices. Some 30 logistics locations were closed in 2012. Net turnover rose 3.8 per cent while the operating profit decreased by 6.2 per cent due to one-off start-up and restructuring costs. EBITDA margin was at 3.5 per cent (2011: 3.9 per cent).

In air cargo, Kuehne + Nagel raised its tonnage by 2 per cent. While gross profit margin improved to 20.6 per cent compared to the previous year (19.8 per cent), EBIT-to gross profit margin at 24.3 per cent was below 2011 (29.2 per cent) due to cost increases. EBITDA decreased by 9.1 per cent.

In Road & Rail Logistics, margin pressure and investments in infrastructure negatively affected the operational result of this business unit, which decreased by 14.3 per cent. EBITDA margin was at 1.1 per cent (2011: 1.4 per cent).

In Seafreight, Kuehne + Nagel increased volume by 6 per cent, handling some 3.5 million TEU.However, the business was affected by margin pressure and cost increases. As a result EBITDA decreased by 5.3 per cent and the EBIT-to-gross profit margin to 30.7 per cent (32.8 per cent in 2011).

In March 2012, the European Commission imposed an anti-trust fine of CHF 65m. Kuehne + Nagel has appealed against the decision before the European Court of Justice, arguing that the Commission has not correctly investigated the facts and the participation of Kuehne + Nagel and has drawn significantly incorrect factual and legal conclusions.

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