Panalpina Annual Report 2006

Report of the Executive Board
20 Panalpina Annual Report 2006
Supply chain management achieved a contribution
margin (gross profit) growth of 11.7% over the previous
year. This value added service is increasingly
attractive to our existing customers, who also
become more and more demanding for tailor­made
solutions supporting their outsourcing strategies.
Operating result
Consolidatet net
earnings
in million CHF
2006
2005
Ebitda
120
184
Cash flow from
operating activities
214
215
313 338
The Group’s Ebit increased by 57.6% from
CHF 165.6 million in 2005 to 261.0 million in 2006,
respectively 57.8% currency adjusted. The currency
impact at this level is a very minimal amount of
0.2 percentage points. The acquisitions performed
during 2005 and recorded for a full year period
in 2006 had an effect of 1.6% on Ebit level. Furthermore,
the operative result was influenced by the
increases in the following income/expense categories
during 2006:
• An increase of 5.1% in personnel expenses
reaching CHF 886.9 million compared to 2005.
A 1 percentage point currency impact needs
to be considered translating in CHF 8.2 million
additional expenses. The increase was influenced
by a 5.3% increase in headcount, one­time
termination benefits related to the change on
Executive Board level, but also worth mentioning
is the high levels of personnel expenses recorded
last year due to one­time change in management
in North America.
• While additional human resources were hired in
Asia to support the business growth, highly
skilled employees were necessary to handle the
specialized business in the oil and gas and
the mining industry in the Africa and CIS regions,
whereas the European and Central and South
American countries concentrated on increasing
productivity.
• Other operating expenses were positively
impacted by a one­time adjustment amounting
to CHF 11 million, which has been recorded
in accordance with the change in estimations of
allowance for trade receivables as described
in the notes of the consolidated financial statements.
Normalized, the resulting expense increase
mainly derives from a raise in rent and communication
expenses in line with the business growth.
The impact from the acquisitions performed
during 2005 accounted for 1% of the increase in
other operating expenses (non currency adjusted).
• A further event had a positive impact on the
other operating expenses. An updated actuarial
calculation on the Group’s captive insurance
company revealed an excess of claims provisions
made in 2003, when the entity was established.
Based on a longer time series of data, the provision
has now been adjusted. The positive impact
of CHF 5.4 million has been recorded in the
last quarter in the region Europe /Africa / Middle
East / CIS.
• After those adjustments, the resulting other
operating expenses increase from current operations
reflects on one side the business growth
handled in 2006, but also the impact of the expansion
of the Group’s network in certain strategic
geographical areas like China and Eastern Europe,
where offices were opened during the course
of the year. The sale of owned buildings realized
in 2005 engendered in 2006 additional rent and
maintenance expenses.
Normalized Ebitda (calculated by excluding impact
of gain on sale of non­current assets and excluding
the impairment of financial assets) increased
from CHF 202 million to 313 million in 2006 or an
increase of 54.7% as follows:
in thousand CHF YE 2006 YE 2005
Ebitda as per annual report 312,669 214,170
in % of contribution margin
(gross profit) 19.7 15.2
Normalized Ebitda* 12, 68 202,216
in % of contribution margin
(gross profit) 19.7 14.4
* Calculated excluding impact of gain on sale of non­current
assets and excluding impairment of financial assets.
Normalized Ebit (calculated by excluding impact
of gain on sale of non­current assets, impairment
of financial assets increased from CHF 153.9 million
to CHF 261.6 million in 2006 or an increase of
70.0% as follows:
in thousand CHF YE 2006 YE 2005
Ebit per annual report 260,998 165,633
Gain on sale of
non­current assets 99 (11,954)
Impairment of
financial assets 511 174
Normalized Ebit* 261,608 15 ,85
in % of contribution margin
(gross profit) 16.4 10.9
* Calculated excluding impact of gain on sale of non­current
assets, impairment of financial assets