Kuehne + Nagel, SembCorp Logistics end cooperation
Switzerland-based forwarding and logistics group Kuehne + Nagel and Singapore-based SembCorp Logistics confirmed Monday they have terminated their unsuccessful four-year-old cooperation agreement and will end their cross-shareholdings.
Ended prematurely by mutual agreement, the commercial agreement between the European and Asian companies commenced in late 2000 and was due to last until Dec.31, 2005. The agreement was originally meant to build a global network of contract logistics activities through a partnership between Kuehne + Nagel in Europe, SembCorp Logistics in Asia and through the acquisition of USCO by Kuehne + Nagel in the United States.
But both Kuehne + Nagel and SembCorp Logistics recognized “the cooperation had not met their expectations,” the Swiss group said in a statement.
“In the course of the cooperation, both groups have recognized that substantial differences regarding respective business approaches, industry focuses and scope of services have constrained successful cross-selling activities and joint market penetration,” it added.
SembCorp Logistics has announced the sale of its entire 20-percent stake in Kuehne + Nagel, totaling 4.8 million shares. Kuehne + Nagel will acquire about 1.7 million shares, while the remaining 3.1 million shares, representing about 13 percent of Kuehne + Nagel’s share capital, will be offered to institutional investors.
In addition, Kuehne + Nagel intends to sell its 5-percent stake in SembCorp Logistics.
Kuehne + Nagel said the cooperation with SembCorp Logistics prevented the company from expanding its contract logistics business in Asia as it wanted, and that its termination will allow the company to set up its own contract logistics activities in the Asia-Pacific region.
The Swiss group has been awarded a “class A license” for its activities in China.
In a separate development, Kuehne + Nagel said it increased its group revenue 21 percent in first nine months to 8.4 billion Swiss francs ($6.7 billion), as its sea and air freight forwarding volumes increased faster than the market average.
“With transport volumes increased by 28 percent in sea freight and 15 percent in air freight, growth rates in both business fields were clearly above the market average,” the Swiss forwarding and logistics group said.
The group also raised its group operating income before amortization 33 percent in the latest nine-month period to CHF283 million ($225 million) from CHF212 million a year earlier. Its net income went up 21 percent to CHF162 million ($129 million) from CHF134 million in January-September of 2003.
In ocean freight forwarding, Kuehne + Nagel’s revenue rose 17 percent year-on-year to CHF4.5 billion ($3.5 billion) in the first nine months, as operating income jumped 21 percent to CHF131 million ($104 million).
The group’s revenue from air freight activities rose 23 percent to CHF1.8 billion ($1.5 billion) in the first nine months, and its operating income from air freight went up 36 percent to CHF79 million ($63 million), from CHF58 million in the corresponding period of 2003.
Kuehne + Nagel’s contract logistics business saw a revenue growth of 5 percent, with revenue reaching CHF870 million ($690 million) in the latest nine-month period. Operating income from contract logistics improved 62 percent to CHF34 million ($27 million), from CHF21 million a year earlier.
“The higher utilization of warehouse capacities in North America as well as increased operational efficiency supported this positive development,” Kuehne + Nagel said.
The group added its European companies increased their rail and road logistics business and improved profitability in the first nine months, with an operational result nearly doubling to CHF26 million ($21 million).
Kuehne + Nagel has more than 20,000 employees at 600 locations in 96 countries.
