All proposals approved
The shareholders approved the annual report, the financial statements and the consolidated financial statements for 2011 and followed the Board of Directors’ recommendation to increase the dividend to CHF 3.85 per share (previous year: CHF 2.75 plus CHF 1.50 from capital contribution reserves). Payout is scheduled for May 15, 2012.
The Annual General Meeting granted discharge to the Board of Directors and the Management Board for the 2011 business year.

Re-elections to the Board of Directors
Dr. Renato Fassbind, Juergen Fitschen, Karl Gernandt, Hans-Joerg Hager, Klaus-Michael Kuehne, Hans Lerch, Dr. Thomas Staehelin, Dr. Joerg Wolle and Bernd Wrede were re-elected to the Board of Directors for one-year terms. 

Statutory Auditor
KPMG AG, Zurich, was confirmed as the statutory and Group auditor for the business year 2012.

Changes to the Articles of Associations
The General Assembly followed the proposal of the Board of Directors to maintain the authorised share capital, to create conditional share capital for employee shares and to make minor technical changes to certain articles. 

The next Annual General Meeting will be held on May 7, 2013.

The report of the globally operating logistics group can be accessed and downloaded on

http://www.kn-portal.com/about_us/investor_relations/annual_reports/

Kuehne + Nagel Group

CHF million

1st Quarter 2012

1st Quarter  2011

Turnover

4,834

4,820

Gross profit

1,502

1,458

Operational result (EBITDA)
          "            including one-off item

218
153

249
.

EBT
          "            including one-off item

168
103

196
.

Net earnings
          "            including one-off item

133
68

155
.

“In the first quarter of 2012 we had to cope with a number of adverse factors,” said Reinhard Lange, CEO of Kuehne + Nagel International AG. “Our investments in growth initiatives resulted in considerable cost increases. We will counteract this trend with strict cost control and measures to improve productivity. Furthermore, profit margins declined in sea and airfreight. In addition, there are one-off charges due to a high antitrust fine, which was reported on March 28, 2012. Nevertheless, we achieved growth above market average.”

Seafreight
In seafreight, Kuehne + Nagel increased container volume by 9 per cent while – according to first estimates – the global container market grew between 3 and 4 per cent. In line with its strategic goals, Kuehne + Nagel increased growth in the transatlantic and transpacific trades. As a result of margin pressure, influenced by significant rate increases in several trade lanes, and high investments in IT and sales, EBITDA-to-gross profit margin declined from 35.9 per cent to 30.3 per cent. The operational result decreased by 15.2 per cent compared to the previous year’s period.
 
Airfreight
The international airfreight market experienced a significant volume decline in the first three months of 2012, resulting in a contraction of 3 per cent after an encouraging volume development in the same period of 2011. Kuehne + Nagel raised tonnage by 4 per cent. Beside the ongoing positive demand in South America, the intra-Asia business developed well and volumes increased in the trades from Asia-Pacific to the Middle East, partly due to the acquisition of an Australian company specialised in Perishables Logistics. Investments in growth initiatives and IT resulted in a decline of the EBITDA-to-gross profit margin from 32.3 per cent to 26.5 per cent. At CHF 54 million, EBITDA was 14.3 per cent below the previous year. Due to the inclusion of the one-off item for the antitrust fine a loss of CHF 11 million was recorded.

Road & Rail Logistics
Good progress was made in the European overland business. Freight volumes increased in the segments groupage and full and part loads despite the difficult economic situation in Southern Europe. The British RH Freight Group, member of the Kuehne + Nagel Group since 2011, considerably contributed to the overall improvement of net turnover by 18 per cent in local currencies. EBITDA increased by 7.7 per cent; at 1.9 per cent the EBITDA margin remained stable at the previous year’s level.

Contract Logistics
The contract logistics business saw divergent regional developments in the first quarter of 2012. Strong demand in Central Europe, Asia and South America resulted in an increase of net turnover by 6 per cent (currency adjusted). In contrast, high margin pressure and volume declines especially in France and Southern Europe led to a decrease of the business unit’s operational result by 19.5 per cent. EBITDA margin was at 3.1 per cent (previous year: 3.9 per cent).

Reinhard Lange: “As a consequence of the experiences made in the first quarter of 2012, we have intensified our cost management. We are confident that the measures implemented as well as solid growth will contribute to an improvement of results in the second half of the year.”

For the 2011 business year, the Board of Directors will propose a dividend increase to CHF 3.85 per share.

Karl Gernandt, Chairman of Kuehne + Nagel International AG: “Considering the market and currency turbulences, the diverging economic developments and the devastating natural disasters, which influenced the business environment in 2011, we achieved very satisfactory annual results. The substantial volume increases and the future-oriented extension of our service portfolio in regions with large market potential mark an important milestone within our strategic growth programme and strengthened our global competitive position. Apart from investments in complementary acquisitions and selected growth areas, we maintained a high level of internal efficiency, as measured by the ratio between gross profit and EBIT. This underlines Kuehne + Nagel’s capabilities. The implementation of our global strategy in combination with a clear focus on profitability will again contribute to a positive development of the Group in 2012.”

Logistics industry
While transport and logistics volumes developed very positively in the first half of 2011, growth steadily slowed during the second half. Cautious consumer and investment behaviour in the U.S.A. and in large parts of Europe, the interruption of supply chains following the disasters in Japan and the significant rise in commodity prices affected the logistics business. The only exceptions were individual regional and industry-specific markets, which showed a constant growth in volume throughout the year. These benefited regional and industry-focused logistics providers like Kuehne + Nagel.

Development of the business units

Seafreight
In 2011, Kuehne + Nagel handled more than 3 million TEU for the first time. With a volume increase of 11 per cent, the company grew twice as fast as the international container market. Kuehne + Nagel achieved double-digit growth rates, particularly in the Asian and non-European trades. In the transpacific lanes, Kuehne + Nagel expanded its volume by more than 15 per cent despite market contraction. The impressive growth of transport volume is largely a result of the Group’s sophisticated product portfolio, innovative and integrated IT-solutions and increased activities in the LCL (Less-than-Container-Load) segment. In addition, the successful expansion of the reefer container business, supported by the acquisition of the majority share of the leading operator in New Zealand, is to be mentioned. With volume growth and high productivity Kuehne + Nagel was able to compensate for pressure on margins and investments in the further development of IT systems. Thus, the operational result remained stable at the previous year’s level; the EBITDA to gross profit margin was at 34.9 per cent (36.0 per cent in 2010).

Airfreight
In airfreight, tonnage increase of 13 per cent exceeded expectations, particularly in view of the market’s cargo volumes, which were 0.7 per cent below the previous year’s figure. Kuehne + Nagel’s outstanding performance was due to the targeted expansion – accelerated by acquisitions – in the perishables logistics segment, and the intensified sales of industry-specific airfreight solutions. As a result, volume increased in almost all trade relations. Particularly high growth rates were achieved in the export business from North America and on the routes from Europe to North America and Asia. The operational result increased by 7.7 per cent, EBITDA to gross profit margin improved from 31.2 per cent in the previous year to an impressive 31.7 per cent.

Road & Rail Logistics
The consistent expansion of activities in the segments groupage, full and part loads and industry-specific distribution led to a 18.8 per cent increase of net invoiced turnover in local currencies. Groupage activities were boosted by the acquisition of British RH Freight Group in 2011, resulting in an above-market volume growth of 10 per cent. The takeover of the German Drude Logistik, Bad Hersfeld, was of high strategic importance. Its highly capable hub operation will ensure productivity improvements in the European groupage network. Investments, made as forecasted, in the further density of the European overland network and in the development of overland activities in growth regions affected the operational result of this business unit, which was 2.3 per cent lower than in the previous year. EBITDA margin was at 1.4 per cent (2010: 1.5 per cent).

Contract Logistics
In contract logistics, 2011 was characterised by strongly divergent regional developments. While Germany and the Netherlands achieved excellent results, the business in some Southern and Western European countries was negatively affected by the softening consumer demand. This applies particularly to France, where the difficult development of results called for extensive restructuring measures. These will continue to have some impact in the current fiscal year. Good progress was made in the expansion of contract logistics activities in Asia and South America. In North America, Kuehne + Nagel achieved a significantly improved result through restructuring measures, the closure of unprofitable sites and newly gained business. On a currency-neutral basis, net turnover rose by 7.8 per cent. The operational result was impacted by one-off costs in connection with the restructuring measures taken in North America and in France and decreased by 14.4 per cent compared to the previous year. EBITDA margin was at 3.9 per cent (2010: 4.4 per cent).

Turnover
In 2011, the Kuehne + Nagel Group achieved an invoiced turnover of CHF 19,596 million, compared to CHF 20,261 million in 2010. With CHF 2,552 million, currency effects impacted turnover significantly stronger than in previous years. Acquisitions positively contributed with CHF 459 million.

While North, Central and South America recorded an increase of 0.8 per cent, turnover declined in Europe by 4.5 per cent, in Asia-Pacific by 4.1 per cent and in Middle East, Central Asia and Africa by 2.6 per cent.

Gross profit
In the logistics industry gross profit is a better performance indicator than turnover. Despite negative currency effects of 12.8 per cent, gross profit only decreased by 1.0 per cent compared to the previous year. Acquisitions positively influenced gross profit with CHF 111 million.

The Asia-Pacific region recorded a gross profit increase of 8.5 per cent, and Middle East, Central Asia and Africa of 3.5 per cent. In the Americas gross profit improved by 2.2 per cent whilst in Europe negative currency effects of 11.9 per cent resulted in a gross profit decrease of 2.9 per cent.

Operational result (EBITDA)
Earnings before interest, tax, depreciation and amortisation of goodwill and other intangible assets (EBITDA) was CHF 26 million (2.5 per cent) lower than in the previous year, also due to a negative currency impact of CHF 122 million. Acquisitions had a positive effect of CHF 14 million.

With CHF 564 million (57.6 per cent) the biggest contribution to the operational result came from Europe, followed by the Asia-Pacific region with CHF 227 million (23,2 per cent), the Americas with CHF 149 million (15.2 per cent) and Middle East, Central Asia and Africa with CHF 38 million (4.0 per cent).

Dividend
In view of the solid development of business and the sustainable high cash flow of the Kuehne + Nagel Group, the Board of Directors will propose to the Annual General Meeting of May 8, 2012, to distribute a dividend increased by 40.0 per cent to CHF 3.85 per share (previous year: CHF 2.75) and therefore lift the payout ratio from 55 to 77 per cent.

Outlook 2012
Uncertainties still persist with regards to the economic development in 2012. Particularly in the first half of the year, global economy and trade are expected to perform less dynamically.

“The annual results 2011 confirm the success of the Kuehne + Nagel Group’s strategy,” said Reinhard Lange, CEO of Kuehne + Nagel International AG. “The investments made in the year 2011 are geared to achieve sustainable and profitable growth and a further successful development of earnings. We are well positioned around the globe and therefore confident to reach our targets in the current business year again: Profitable growth above-market average in all business units. We are facing up to the uncertain economic development by consistent cost management, process optimisation and increased productivity.

Kuehne + Nagel Group

CHF million

Jan-Sep 2011

Jan-Sep 2010

Turnover

14,598

15,178

Gross profit

4,380

4,453

Operational result (EBITDA)

728

746

EBT

579

572

Net earnings

454

449

Seafreight
During the first nine months of 2011, Kuehne + Nagel increased its seafreight volume by 11.4 per cent. Thus, the Group clearly outperformed the global container market growth, estimated to be around 5 per cent after volume growth dropped further during the third quarter. Leveraging its value-adding product portfolio, Kuehne + Nagel achieved highest growth in Asia outbound trades, especially to the Middle East and South America. Following the expansion of its specialised network for perishables in reefer containers, volume in this Kuehne + Nagel segment grew significantly as well. Despite slightly lower margins due to very low freight rates in the third quarter of 2011, EBITDA-to-gross profit margin stabilised at 35,3 per cent on a very high level (previous year: 35.8 per cent) in the first nine months of 2011. The operational result remained at the previous year’s level.
 
Airfreight
In airfreight, Kuehne + Nagel increased its tonnage by 14.5 per cent in the first nine months, although growth in the international airfreight market considerably slowed down in the last months. Compared to the same period in 2010, market freight volumes stagnated. Kuehne + Nagel performed particularly well in Europe, South America and North America, whereas demand in Asia declined. Investments in the development of solutions, tailored to specific industries, such as pharmaceutical and high-tech, were compensated by improved productivity. As a result, EBITDA-to-gross profit margin increased from 30.5 per cent in 2010 to 32.3 per cent in 2011. EBITDA was improved by 13.1 per cent.

Road & Rail Logistics
In the first three quarters of the year, Kuehne + Nagel’s European overland activities recorded a growth in net turnover of 4.9 per cent (currency adjusted: 19.4 per cent.) The company continued to invest into the expansion of its European groupage network and at the same time focused on the development of road logistics services in markets outside Europe. Through the acquisition of Grupo Eichenberg, Brazil, Kuehne + Nagel has gained access to the South American overland market. Currency adjusted, the operational result was slightly above the previous year’s level, EBITDA margin decreased from 1.7 to 1.4 per cent.

Contract Logistics
In contract logistics, net invoiced turnover declined by 5.7 per cent (currency adjusted: increased by 7.9 per cent). Focal point of the business unit’s strategy has been the expansion of services for multinational customers and the consolidation at strategic logistics hubs. Furthermore, the integration of contract logistics services into end-to-end solutions has been an integral part of the strategic approach. The challenging market conditions in France led to margin pressure, restructuring measures and a negative impact on results. Compared with the previous year’s period, EBITDA in contract logistics was reduced by 11.5 per cent; currency adjusted it remained stable. EBITDA margin decreased from 4.1 to 3.7 per cent.

Reinhard Lange, CEO of Kuehne + Nagel International AG, said: “Considering the softening market growth, we are satisfied with our results in the first nine months of 2011. Volatility is high and the fourth quarter is expected to remain demanding. We will continue to consequently implement our growth strategy and further build on our commitment to deliver innovative, value-adding services to our customers around the world.”

In the road logistics sector, Grupo Eichenberg is one of the leading providers, both in the domestic market and in Mercosur trades; the company operates daily services to and from Argentina, Chile and Uruguay. Besides this core competence, Grupo Eichenberg is also very successful in domestic airfreight forwarding, another important segment of the Brazilian logistics market.

Karl Gernandt, Chairman of the Kuehne + Nagel International AG said: “This acquisition is in line with our global growth strategy and ideally fits our objective to significantly expand our activities in particular in Brazil, one of the world’s key growth markets. Grupo Eichenberg complements the service offering and customer base of our strongly performing national company. Together, we are able to increase our value proposition by providing global integrated door-to-door solutions in Brazil.” 

“In a dynamically growing market, companies from industry and trade are looking for global logistics solutions, allowing them to create value and increase competitive advantage,” said Gerson Eichenberg, Chairman of Grupo Eichenberg. “Jointly, we can optimally meet these requirements, and thus further strengthen Kuehne + Nagel’s market position,” the two gentlemen announced.

Kuehne + Nagel Group

CHF million

First half 2011

First half 2010

Turnover

9,786

9,849

Gross profit

2,954

2,961

Operational result (EBITDA)

502

475

EBT

398

358

Net earnings

312

281

"The Kuehne + Nagel Group performed strongly in the first six months of 2011, despite a slowdown in market growth in the course of the second quarter and results negatively impacted by the strong Swiss Franc,” said Reinhard Lange, CEO of Kuehne + Nagel International AG.

Seafreight
With seafreight volumes increasing by 12 per cent in the first half of the year, Kuehne + Nagel succeeded in doubling the market growth rate of about 6 per cent. Highest growth was achieved in exports from Europe to North America and Asia as well as from Asia to Latin America and the Middle East.  EBITDA margin in relation to gross profit improved from 34.5 to 35.2 per cent, reaching a new record high as a result of cost efficiency and increased volumes. The operational result (EBITDA) was up by 7.8 per cent despite considerable investments in growth initiatives.

Airfreight
In airfreight, Kuehne + Nagel increased tonnage by 18 per cent, in spite of sharply declining volumes in the global airfreight market during the second quarter, resulting in a market growth of just about 2 per cent in the first half of 2011. Kuehne + Nagel’s expansion of activities in the field of perishable logistics following the acquisitions in South America as well as increased demand in the trade lanes from Europe to North America and Asia contributed to the strong performance. Also, the volume increased in trades from North America to Europe and to South America, whereas airfreight business from Asia to Europe did not reach expectations. EBITDA-to-gross profit margin improved from 29.2 per cent to 32.6 per cent. The operational result was 22.9 per cent higher than in the same period last year. 

Road & Rail Logistics
The extension of activities in the groupage, full load and part load businesses led currency adjusted to a 21.4 per cent rise in net invoiced turnover. RH Freight, specialised in European groupage services and as part of the Kuehne + Nagel Group consolidated as of April 2011, contributed about 10 per cent to the increase of shipments. While the results in Western Europe clearly improved, the business unit’s 6.9 per cent decrease of EBITDA was due to investments in the organic development of overland services in countries such as Poland and China. EBITDA margin was at 1.8 per cent (previous year: 2.1 per cent). 

Contract Logistics
In contract logistics net invoiced turnover rose currency adjusted by 5.4 per cent. New businesses and the consolidation of warehousing activities at major logistics centres supported the enhancement of capacity utilisation to 94 per cent. Thanks to productivity improvements, the EBITDA margin remained on the previous year’s level. The operational results increased currency adjusted by 6.5 per cent.

Outlook
“Considering the debt crisis and currency situation in Europe as well as the volatile world economy, it is not possible to reliably forecast how the global  markets will develop in the second half of the year,” said Karl Gernandt, Chairman of the Board of Directors of Kuehne + Nagel International AG. “Market analysts anticipate slower growth in the logistics industry. Nevertheless, the Kuehne + Nagel Group is well positioned to tackle future challenges. While maintaining an effective cost management, the Group will continue to pursue its global strategy, focussing on investments in growth markets and -segments. In this context, the acquisition in Brazil announced today is a significant step.”

In addition to the publication of the half-year results 2011, please note Kuehne + Nagel’s press release “Expansion in Brazil“.  

Karl Gernandt, Executive Vice Chairman of the Board of Directors, outlined the strategic cornerstones of the growth initiative, which had been developed under his leadership and that will run into 2014. Its primary goal – sustained increase of the value of the company – will be generated through increased customer focus, integrated logistics solutions, efficiency and IT leadership.

All proposals approved
The shareholders approved the annual report, the financial statements and the consolidated financial statements for 2010 and followed the Board of Directors’ recommendation to increase the dividend to CHF 2.75 per share compared to the previous year (CHF 2.30). In addition, the shareholders approved the distribution of capital contribution reserves, amounting to CHF 1.50 per share. Payout is scheduled for May 17, 2011.

The Annual General Meeting granted discharge to the Board of Directors and the Management Board for the 2010 business year.

Elections to the Board of Directors
Juergen Fitschen, Karl Gernandt, Hans-Joerg Hager, Klaus-Michael Kuehne, Hans Lerch, Dr. Wolfgang Peiner, Dr. Thomas Staehelin, Dr. Joerg Wolle and Bernd Wrede were re-elected to the Board of Directors for one-year terms.

Dr. Renato Fassbind, a Swiss citizen, was newly elected to the Board of Directors for a one-year term. He brings with him an extensive knowledge of financial management. From 2004 until October 2010, Dr. Fassbind held the position of Chief Financial Officer at Credit Suisse Group AG and Credit Suisse AG. In this function, he had been a member of the Executive Boards of Credit Suisse Group AG and Credit Suisse AG since 2004.

Statutory Auditor
KPMG AG, Zurich, was confirmed as the statutory and Group auditor for the business year 2011.

The next Annual General Meeting will be held on May 8, 2012.

Kuehne + Nagel Group

CHF million

1st Quarter 2011

1st Quarter 2010

Turnover

4,820

4,604

Gross profit

1,458

1,442

Operational result (EBITDA)

249

228

EBT

196

167

Net earnings

154

131

"The good results in the first quarter underline the value of our global logistics capabilities, flexibility and operational efficiency in a market influenced by different economic conditions, political unrest and natural disasters," said Reinhard Lange, CEO of Kuehne + Nagel International AG. "As planned we expanded our activities in all business units while at the same time increasing productivity.”

Seafreight
In seafreight, Kuehne + Nagel increased container volume by 14 per cent while - according to first estimates - the global container market grew between 7 and 8 per cent. Kuehne + Nagel achieved highest growth in the trade lanes to and from Latin America as well as to and from the Middle East. As outlined in its strategy, the Group increased volumes in transpacific and intra-Asian trade lanes. In the first three months of 2011, EBITDA-to-gross profit margin rose from 34.0 per cent in the previous year to 35.9 per cent due to high operational efficiency. EBITDA improved by 15.5 per cent to CHF 112 million.

Airfreight
With a 21 per cent increase in volume, Kuehne + Nagel’s airfreight business again exceeded expectations and outperformed the market, estimated to have grown between 6 and 7 per cent. In all regions, Kuehne + Nagel benefited from its investment in sales and its industry-specific product offering. In particular, Kuehne + Nagel’s expansion of the specialised network for perishables yielded results. Following the acquisitions in South America, volumes significantly increased in this segment. Double-digit growth was also achieved in worldwide exports for the automotive industry. Due to the above-market average volume growth and increased productivity EBITDA-to gross profit margin improved from 28.7 to 32.3 per cent. The operational result rose by 28.6 per cent to CHF 63 million.

Road & Rail Logistics
Kuehne + Nagel gained market share in the European overland business as well. Net invoiced turnover increased by 15.1 per cent (currency adjusted) exceeding market growth of 6 per cent. EBITDA remained stable on last year’s level, despite continuous price pressure, fierce competition and investments into the expansion of the European groupage network and its full and part load activities. EBITDA margin decreased from 2.2 to 1.9 per cent. The results of the recently acquired RH Freight, United Kingdom, a company specialised in European groupage activities, will be consolidated as of April 2011.

Contract Logistics
In the contract logistics business unit net invoiced turnover rose by 7.9 per cent (currency adjusted). New business wins contributed to a reduction of idle space from 12 to 7 per cent compared with the previous year's first quarter. However, start-up costs for various new projects negatively impacted EBITDA, which was 8.9 per cent below the preceding year. EBITDA margin declined from 4.2 to 3.9 per cent. Measures have been implemented to improve productivity.

Reinhard Lange: "It is difficult to forecast the world economic development in the months to come. We are confident that our resilient integrated business model will support the continuation of our strong performance.”

The Board of Directors of Kuehne + Nagel International AG will propose to the Annual General Meeting of May 10, 2011, to repay capital contribution reserves according to article 20 DBG to its shareholders, amounting to CHF 1.50 per share. Upon approval the payment is planned for May 17, 2011.

In addition to the proposed dividend for the business year 2010 of CHF 2.75 per share, Kuehne + Nagel shareholders will receive CHF 1.50 per share from repayment capital contribution reserves, resulting in a total payment of CHF 4.25 per share.