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

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
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Panalpina Annual Report 2010