The COVID-19 pandemic has left Kuehne + Nagel facing an “immense” challenge in the coming months, the company has warned.
Announcing its group results in the first quarter of 2020, the global logistics giant revealed a “significant” drop in volumes in March as the pandemic advanced across Europe.
Despite a solid start to the year, the road logistics division saw volumes decline “significantly” in March, with all sectors affected, with the exception of e-commerce and pharma.
The company said volumes in the UK, France and Italy saw particularly sharp drops.
During the period, Kuehne + Nagel’s road logistics unit saw net turnover fall by 4.2% year-on-year to CHF 863m (£713m) and gross profit decline by 1.4% to CHF 281m (£232m).
Earnings before interest and tax (EBIT) fell to CHF 17m (£14m), with currency effects having a negative impact of 4.8% on net turnover and 4.2% on EBIT.
Kuehne + Nagel’s contract logistics division also saw its automotive and retail volumes hit by the pandemic, the company said.
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However, demand for basic goods, pharma and e-commerce services increased.
In the first quarter of 2020, the contract logistics net turnover fell by 6.1% to CHF 1.2bn (£99m) compared with the same period the previous year, gross profit by 4.0% to CHF 946m million (£782m) and EBIT by 34.6% to CHF 17m (£14m).
Currency effects had a negative impact of 4.9% on net turnover and 3.8% on EBIT.
In March this year, Kuehne + Nagel announced the sale of a major part of its UK contract logistics portfolio to XPO Logistics, following a major review of its contract logistics business which includes the drinks logistics, food services and retail and technology divisions.
Despite the disruption caused by the pandemic, the company said 90% of its distribution centres worldwide operated without interruption in the quarter, aided by a “rapid adjustment of resources” and the ongoing restructuring of its contract logistics division.
Dr Detlef Trefzger, chief executive of Kuehne + Nagel International said: “The coronavirus pandemic is an immense global challenge, also for Kuehne + Nagel. Industrial production and trade volumes weakened significantly.
“In this situation, Kuehne + Nagel maintained its operational performance, closely managed a number of specialty businesses and won new customers.
“In the case of basic commodities and pharmaceuticals, transport volumes were maintained at a respectable level.
“Our company will face major challenges in the coming months, but is well positioned in view of its customer proximity, agility and digital offerings. A high level of liquidity characterises the company’s solid financial strength.”
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