Annual Report 2010 (PDF, 5.2MB) - Panalpina Annual Report 2012

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Reports of the Board of Directors and the Executive Board 14 In 2010, the Panalpina Group generated 51 % of its net forwarding revenue in Europe / Middle East / Africa and CIS, 20 % in North America, 17 % in Asia Pacific and 12 % in Central and South America. Net forwarding revenue per region 2010 2009 in million CHF 5,000 4,000 3,000 2,000 1,000 0 3,640 3,189 Europe/Middle East/ Africa and CIS 1,409 1,176 North America 845 702 Central and South America Net forwarding revenue per region (2010) 1,270 891 Asia Pacific As a result of these developments, the Group’s NFR generated with air freight activities increased by 29 % to CHF 3,503 million and was the segment which saw the greatest rebound. In the Ocean Freight segment, NFR advanced by 17 % to CHF 2,771 million. In the third segment, Logistics (which the Group renamed from the previously used term “Supply Chain Management”), NFR saw an increase of 1 % to CHF 890 million. Next to consolidating and globally standardizing the various activities in this segment (mainly warehousing and distribution services) during 2010, demand remained weak in the Group’s oil and gas and projects business where the market was lagging the general economic recovery, which slowed progress in this segment. In 2010, the Panalpina Group generated 49 % of its net forwarding revenue with Air Freight, 39 % with Ocean Freight and 12 % with Logistics. Europe /Middle East/Africa and CIS North America 20% 51% Net forwarding revenue per segment 2010 2009 in million CHF 4,000 3,500 Central and South America 12% Asia Pacific 17% Preliminary estimates of the International Air Transport Association (IATA) show that international air freight volumes (measured in freight ton kilometers) grew by approximately 20 % in 2010. At the same time, global volumes handled in the ocean container market rose in excess of 10 % according to various market sources and nearly reached or even exceeded (in Asia and North America) the 2008 record level. Against this backdrop, together with the Group’s ability to gain market share, the Group’s Air Freight and Ocean Freight segments, which jointly contribute 88 % to Group NFR, both recorded strong increases in net forwarding revenue in 2010. The tightness of carrier capacity that was prevalent for a large part of the year led to substantial freight rate hikes, which additionally helped increase the Group’s NFR due to the pass-through character of freight rates for an asset-light service provider like Panalpina. Moreover, average jet fuel and bunker prices in 2010 were more than 20 % above 2009 levels, resulting in distinctly higher fuel and bunker surcharges (essentially also items with a pass-through character) which the Group invoiced to its customers. 3,000 2,500 2,000 1,500 1,000 500 0 3,503 2,714 2,771 2,360 890 884 Air Freight Ocean Freight Logistics Net forwarding revenue per segment (2010) Air Freight 49% Ocean Freight 39% Logistics 12% Panalpina Annual Report 2010
Reports of the Board of Directors and the Executive Board Gross profit (GP) Gross profit, a better measure for actual sales performance than net forwarding revenue in the forwarding industry, increased by 7 % from CHF 1,377 million in 2009 to CHF 1,480 million in 2010. In local currencies, the increase was 11 %. This 4 % difference, which had a negative impact on GP of CHF 54 million, is largely due to the adverse movement of the euro and the US dollar against the Swiss franc. In addition to the strong rebound of world trade which boosted global trade volumes, Panalpina’s market share gains were another important factor behind the increase in the Group’s gross profit. The unit profitability (gross profit per ton of air freight and per TEU of ocean freight), a measure of the pricing power of a freight forwarder, also showed a sequential improvement every quarter (in currency neutral terms), although the 2010 average remained below the prior year levels which were distorted by an unusually high volatility of carrier freight rates. The gross profit margin (gross profit as a percentage of net forwarding revenue) decreased from 23 % to 21 %, mostly due to the markedly higher average fuel surcharges and freight rates, which had a positive effect on net forwarding revenue while having a relatively neutral effect on gross profit as these are normally pass-through items (subject to a certain time lag) for freight forwarders. Europe / Middle East /Africa and CIS (EMEA) is also the most important region within Panalpina in terms of gross profit generation, representing more than half of the Group’s gross profit. In 2010, gross profit generated in EMEA increased by 4 % to CHF 760 million, supported by higher freight volumes on all major trade lanes. Similar to net forwarding revenue, the currency development in this region adversely affected gross profit, mainly due to the euro but also the British pound, with both significantly depreciating against the Swiss franc. In North America (NORAM), gross profit rose 4 % to CHF 266 million, which is a reflection of the higher volumes handled in this region on the back of the recovering North American economies and restocking which additionally boosted global trade flows. In this region, particularly the weakness of the US dollar adversely impacted the Group’s gross profit when translated into Swiss francs. Asia Pacific (APAC) and Central and South America (LATAM) recorded the highest increases in GP, which management attributes to the relatively better economic development of these regions in 2010 that manifested itself in strong intraregional and interregional trade flows in and between these parts of the world. In LATAM gross profit rose 8 % to CHF 156 million, while gross profit in APAC increased 22 % to a total of CHF 298 million and thereby overtaking NORAM as the Group’s second largest region in terms of gross profit. In 2010, the Panalpina Group generated 51 % of its gross profit in Europe / Middle East / Africa and CIS, 18 % in North America, 20 % in Asia Pacific and 11% in Central and South America. Gross profit per region 2010 2009 in million CHF 1,000 800 600 400 200 760 731 0 Europe/Middle East/ Africa and CIS 266 256 North America Gross profit per region (2010) Europe /Middle East/Africa and CIS North America Central and South America Asia Pacific 156 145 Central and South America 18% 11% 51% 298 245 Asia Pacific 20% The varying volume and pricing dynamics in the Group’s core business segments during the reporting year becomes evident when looking at the development of gross profit. The air freight market recorded the strongest growth rate of all transport modes in 2010, resulting in relatively stronger volume growth for Panalpina in this segment. In addition, despite the tight carrier capacity which led to rising freight rates for a large part of the year, the Group managed to restore a significant fraction of its gross profit per transported cargo unit during the course of the year which started at very depressed levels. The Group’s gross profit realized through air freight forwarding services increased by 19 % in 2010, reaching CHF 667 million versus CHF 562 million the year before. In the Ocean Freight segment, GP saw a slight contraction of 1% to CHF 453 million. Panalpina’s volume growth rate was above that of the global ocean freight market which 15 Panalpina Annual Report 2010
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Page 3 and 4: Glossary Tonnage A ship’s freight
Page 5 and 6: Contents Introduction 4 An Intervie
Page 7 and 8: Our products continue to play a maj
Page 9 and 10: Talking of Dubai, there have been i
Page 11 and 12: 9 exported by these firms, instead
Page 13 and 14: Reports of the Board of Directors a
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Page 23 and 24: 21 Executive Board From the left: M
Page 25 and 26: outh America Asia Pacific Europe Af
Page 27 and 28: Reporting Regions market share in S
Page 29 and 30: Central and South America Promising
Page 31 and 32: Reporting Regions Express air freig
Page 33 and 34: Air Freight Ocean Freight Logistics
Page 35 and 36: Core Activities Ocean Freight Panal
Page 37 and 38: Core Activities Overland haulage is
Page 39 and 40: il and Fashion Oil and Gas Industri
Page 41 and 42: Customer Groups Customer case Coope
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Sustainable Growth Distribution Pol
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Sustainable Growth Alastair Roberts
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Sustainable Growth 75 www.panalpina
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Appendix Ordinary gross dividend pa
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Appendix 157 Kuwait Safat Luxembour
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Appendix Imprint 159 Panalpina Worl
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Annual Report 2010 (PDF, 5.2MB) - Panalpina Annual Report 2012

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