Costs down, profits up

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The last month has seen many of the largest European logistics companies release their financial results for the full year 2003. Largest of them all, Deutsche Post, announced that it exceeded €40 billion in revenues for the first time. However revenues increased by only 1.9 per cent due to the negative impact of currency fluctuations. As was the case with a number of companies, it managed to increase its profitability in its logistics division, although this was as a result of cost cutting rather than an improvement in the market.

Exel saw the market pick up strongly in the second half of 2003. It managed to increase its turnover and profits although its margins fell to just over three per cent. The one division which disappointed was its US freight management operations where operating profit declined by 96 per cent within the context of a highly competitive market. Conversely its US contract logistics operations made strong progress.

Tibbett & Britten increased its sales by eight per cent but operating profits fell significantly by 15 per cent, resulting in an operating margin of 1.4 per cent. The fall in profits resulted from a number of one off costs in the first half of the year coupled with problems in its North American division. Europe performed more strongly.

Thiel Logistik, the acquisitive Luxembourg based logistics operator, increased its revenues strongly by 21.9 per cent. However due to its well documented problems in integrating its acquisitions, operating profits fell steeply, and it reported an operating margin of just 0.1 per cent. Taking into account one off costs associated with a major re-structuring programme Thiel made a loss of €156.2m.

ABX Logistics, a subsidiary of Belgian Railways, is another company which has had problems with the integration of acquisitions. As a result it sold the majority of its non-transport logistics business in France to smaller rival MGF Logistique.

Away from company news, there was another twist to the saga of the German road toll, or LKW Maut. In February the Toll Collect consortium of DaimlerChrysler and Deutsche Telekom was sacked by the German government due to continued delays in its implementation. However in a major volte face the consortium was reappointed following intervention by the German Chancellor, Gerhard Schroder. The issue forced its way on to the higher political agenda as many people considered that Germany’s industrial and technological reputation was at stake over the successful introduction of the toll.

John Manners-Bell

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