Under the new agreement, Kuehne + Nagel has implemented a solution that will provide a platform for sustainable growth, improved communication and further collaboration between suppliers. A key enabler is a new IT system, which will provide visibility of menu sales and stocks to suppliers upstream, allowing for more accurate planning and forecasting.

Kuehne + Nagel will manage two regional distribution centres (RDC’s) at Trafford Park, Manchester and Greenford, Greater London, on behalf of Spirit. Offering a combined total warehousing space of over 18,000m2, these RDC’s will handle 1200 fresh, frozen and ambient product lines, with stocked lines being picked and merged with just-in-time lines for onward delivery to the pubs. The operation will run six days per week, typically making three deliveries each week to each pub via a national trunking and radial distribution fleet of 60 vehicles.
 
Spirit’s Head of Logistics, Vance Fairman-Smith, said: “At the heart of the decision to appoint Kuehne + Nagel was the need to support our pubs with a robust supply chain operation that would ultimately make it easier for pub employees to deliver great service to guests.”
 
The Food Service sector is a strategic growth area for Kuehne + Nagel. The logistics provider has invested in developing solutions which offer significant advantages over the more traditional wholesale routes to market. These advantages include increased control and visibility of costs, improved service levels, and the inclusion of recycling and reverse logistics. In the United Kingdom, Kuehne + Nagel now runs three multi-temperature distribution centres, and carries out 105 food service deliveries per hour on a 24/7 basis.
 
John Hartley, Kuehne + Nagel’s Senior Vice-President, Sales & Marketing for North-West Europe said, “With an increasing trend towards eating out, the third-party logistics model has become attractive to multiple restaurant operators. Not only does it support their growth, it also offers greater reliability and product availability, and therefore an improved guest experience. Kuehne + Nagel is now positioned as the market leading third-party logistics provider for food service in the United Kingdom, and we are looking forward to embarking on our new long-term partnership with Spirit Pub Company.”

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.

A new facility located at Heathrow’s Terminal 3 supports this service. Storage of critical spare parts at the airport itself allows deliveries to be made to stand at any of the currently operating airport terminals within a 15 minute lead time. Supply to the airside facility is managed by Kuehne + Nagel’s 5,000m2 airfreight hub at Uxbridge, Middlesex, with seamless access through airport security controls, thanks to Kuehne + Nagel’s status as a regulated agent.
 
As part of its global ‘Supply the Sky’ offering, Kuehne + Nagel has spent many years developing services to meet the critical issue of spare parts availability, including the provision of dedicated hand-carried deliveries for AOG situations. Many of Kuehne + Nagel’s customers have come to rely on this service, and welcome the new development at Heathrow.

Daniel Lerch, Manager AOG Management for SR Technics commented, “Delivering material directly on stand during an AOG situation is crucial for an efficient recovering of an aircraft. Very often the last mile of the handover to the customer is the most difficult part in the whole supply chain if it comes to airside delivery. Handling agents are out of their service hours and nobody can be reached to bring the part to the engineers.  Kuehne + Nagel is closing an important gap by providing this new service at LHR and we are hoping that they will be able to expand their service to other stations.”

Chris Edwards, Senior Vice-President Airfreight for Kuehne + Nagel North-West Europe said, “By working in close cooperation with our aerospace customers we have gained a deep understanding of their business and challenges. Based on their feedback, we have responded with a new service that is tailored to meet their requirements and also perfectly complements our market-leading Supply the Sky portfolio of products.”

The Sephora logistics operations will be provided on a dedicated basis, in a newly built 12,900 sqm facility, fully compliant with the latest security and “green building” standards and equipped with large photovoltaic solar power installations.
 
Located in the Logistics Park of Santa Cristina e Bissone in the Lombardy region – some 50 kilometers southeast of Milan - the new facility ideally complements the existing 90,000 sqm area Kuehne + Nagel already operates in the Park.
 
Maurizio Stroppa, Supply Chain Manager of Sephora, explained: “The development of Sephora is greatly supported by its logistics choices. In this context, the new international logistics centre is a key element for our present and future growth in Eastern Europe, Far East and South East Asia. 
 
"We are delighted that the customer has extended the contract and thus demonstrated its confidence in Kuehne + Nagel’s expertise, capabilities and staff”, said Ruggero Poli, Managing Director of Kuehne + Nagel Italy. “Even more so as it concerns the internationalisation of the logistics operation”, he added.

While initially Kuehne + Nagel offered international forwarding services for local customers, it opened its first warehouse just one year later. The company is proud of its long-lasting partnership with Bosch, the first customer served in the contract logistics field. Due to the growing demand for high quality integrated logistics solutions, Kuehne + Nagel expanded its presence in Poland and operates 19 locations in 12 cities.

“Today, we focus in particular on providing specialised services for the high-tech, industrial goods, automotive, FMCG-Retail as well as pharmaceutical / healthcare industries," said Tobias Jerschke, Managing Director of Kuehne + Nagel Poland. “To ensure highest quality and efficiency for our customers, we will continue to optimise our logistics infrastructure and strengthen our network. Furthermore, we will concentrate on extending our domestic and international road transportation activities and integrated logistics solutions."

In order to provide transparent and reliable distribution services to over 40 OBI stores across Poland, Kuehne + Nagel has developed a booking application which allows all OBI stores to view the central stock in order to avoid shortages. Value-added-services such as labelling and cross-docking pallets for some suppliers complement the service portfolio.

The project was implemented within three months following Kuehne + Nagel’s proven CTI (Customer Transition & Integration) methodology. The process ensures a smooth transition and integration of the customer’s business using experienced project specialists, standardised tools and systematic knowledge transfer.

Adam Rosiński, Member of the Board of OBI Poland, comments: “Combining the international with the domestic shipment flows gives us the opportunities to lever the information across the whole process, which is important in our business which has a strong seasonal focus.”

Tobias Jerschke, Managing Director of Kuehne + Nagel in Poland says: “We are especially proud of this business win, as Kuehne + Nagel with its global logistics network is responsible for the management of the entire OBI supply chain beginning at the container terminal in Asia, including the intermodal pre-haulage and warehousing services in Poland and finishing with the final delivery to the OBI stores. This is true door-to-door supply chain management.”

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.”

"We will carefully consider the decision of the EU Commission and its rationale," said Karl Gernandt, Chairman of Kuehne + Nagel International AG. "However, already now we are of the opinion that the Commission has not correctly investigated the facts and the participation of Kuehne + Nagel and has drawn significantly incorrect factual and legal conclusions. In addition, Kuehne + Nagel’s comprehensive cooperation  throughout the investigation was not adequately acknowledged. That is why we take into consideration to appeal against the decision before the European courts."

Four service levels cater for all needs
KN PharmaChain offers four service levels, depending on the grade of specific temperature control requirements and special handling demands of each shipment. Full risk assessments of carrier partners as well as of transport lanes ensure best-in-class services on all routes within the KN PharmaChain network comprising of 58 strategically designated stations. Comprehensive Best Practice (GxP) policies apply for staff, working processes and facilities, and by the end of 2012, all locations will be fully GxP-compliant.

Kuehne + Nagel plays a pioneering role in shipment visibility
As an additional option, temperature visibility will be provided by the use of active wireless sensors which record and transmit the shipment temperature throughout the entire transport chain. Logistics facilities are equipped with active wireless transmitting technology and customers can view temperature indications directly inside the KN Login online tracking & tracing tool. Kuehne + Nagel is the first logistics provider to offer a service using active sensors. Additional added-value services include globally available packaging solutions.

Setting new industry benchmarks
Temperature controlled shipments are monitored by the KN PharmaChain CareTeam, operating 24 hours/day and 7 days/week from two locations in Europe and the Americas. An electronic alert system ensures that any disruption in the supply chain will be reported immediately to the CareTeam which is pro-actively tracking all temperature controlled shipments.

Industry expertise and product know-how are key elements of KN PharmaChain. This is why Kuehne + Nagel has award-winning training programmes in place which were developed in cooperation with customers.
 
“KN PharmaChain is our dedicated, end-to-end supply chain solution for Pharma & Healthcare shipments, either temperature or non-temperature controlled. We have developed this product in close cooperation with customers and partners and are convinced that Kuehne + Nagel once again introduces innovative solutions which will set new industry standards”, explains Tim Scharwath, Executive Vice President Air Logistics of Kuehne + Nagel International AG.