KUEHNE & NAGEL SEES PROFIT DECLINE IN FIRST HALF

KUEHNE & NAGEL SEES PROFIT DECLINE IN FIRST HALF

   Kuehne & Nagel International, the highly profitable Swiss forwarding and logistics group, reported an 11-percent decline in its net income for the first half of the year, to 74 million Swiss francs ($50 million).

   The net result compares with a profit of CHF83 million in the first half of 2001.

   Group revenue rose 2 percent, to CHF4.2 billion ($2.9 billion), from CHF4.1 billion in the first half of last year. Gross profit improved 24 percent, to CHF952 million ($648 million), from CHF765 million.

   Operating income (earnings before interest and tax) decreased 4 percent, to CHF115 ($78 million), from CHF120 million a year earlier.

   Kuehne & Nagel said its lower profit results reflect a deteriorated financial result, increased amortization charges for goodwill and software, and a loss on its warehousing business.

   The global economic slowdown prompted customers, primarily from the technology and retail sectors in North America, to substantially reduce inventories, leading to disappointing results in warehousing, Kuehne & Nagel said. By contrast, the group’s European contract logistics business and the distribution activities performed favorably.

   The group’s warehousing activities made a loss of CHF6 million (about $4 million), on revenue of CHF388 million ($ 264 million) in the last six-month period, compared to a profit of CHF7 million and revenues of CHF220 million in the same period of 2001.

   Kuehne & Nagel’s distribution arm posted an operating profit of CHF4 million ($3 million) on revenue of CHF183 million ($124 million), up from a profit of CHF3 million and revenue of CHF125 million a year before.

   The sea-freight division of Kuehne & Nagel reported an operating profit of CHF65 million ($44 million) on revenue of CHF2 billion ($1.3 billion), as compared to a profit of CHF56 million and revenue of CHF1.9 billion in the first half of 2001.

   The group’s air-freight arm had an operating profit of CHF31 million ($21 million) on revenue of CHF981 million ($667 million), compared to a profit of CHF30 million and revenue of CHF997 million a year before.

   “We are pleased about the results we have achieved in the first half of the year despite all odds — freight rate fluctuation and lowest-ever inventory levels globally,” said Klaus Herms, chief executive officer of Kuehne & Nagel International AG.

   Kuehne & Nagel said it still expects to report a net profit of more than CHF150 million (about $102 million) for the full year 2002.