ANNUAL REPORT 2011 - Kuehne + Nagel

Logistics industry
While transport and logistics volumes developed very positively in
the first half of 2011, growth steadily slowed in the second half of
the year. The disruption of supply chains following the disaster in
Japan and the marked rise in price of oil, had a negative impact.
Exceptions were individual regional and industry-specific market
segments which showed a constant growth in volume throughout
the year. These benefited logistics providers like Kuehne + Nagel
with a focus on appropriate regions or sectors and those who
were able to rapidly adapt their structures to the changing
volume situation.
The general trend towards consolidation in the logistics industry
continued, particularly during the first half of 2011. However,
there were no transactions on such a scale as to transform the
structure of the industry. The highly fragmented logistics industry
is still experiencing persistent pressure on profit margins. This situation
induced the Kuehne + Nagel Group to make some notable
acquisitions in line with the strategy of focusing on specific
regions and industries which it has pursued since 2010.
Performance and results
Due to the consistent implementation of the selective growth
programme, the Kuehne + Nagel Group outpaced the volume
growth of the market in all fields of activity. The performances
of the seafreight and airfreight business units were again the
main pillars of success. In both areas high internal productivity
and strict cost management compensated for the costs of
investments made in technology and product development and
strengthening of niche segments. The EBITDA margin in relation
to the gross profit remained stable at the previous year's
level.
Report of the Board of Directors
Significant developments in overland transport were the growth
in volume resulting from the further increased density of the
European network and building-up of activities in growth markets
(Brazil and Mercosur). A transaction of major strategic
importance was the acquisition of Drude Logistik, Bad Hersfeld,
whose highly functional hub facility will ensure efficiency and
productivity in the European groupage network. The RH Freight
Group in the UK, which was also acquired in the year under
review, contributed substantial transport volumes as well as
regular network services.
In contract logistics the year 2011 was marked by highly divergent
developments. The situation in North America was
improved by an effective restructuring, the closure of unprofitable
locations and new business wins. Contract logistics activities
in Germany developed very favourably, while in a number of
West European countries business suffered as a result of the considerable
decline in demand in trade and the consumer goods
industry. Particularly in France, the difficult development of the
results necessitated extensive restructuring measures. These will
continue to have some impact in the current fiscal year.
The internal efficiency of the Kuehne + Nagel Group, in combination
with optimised IT-based processes, was the foundation
of its solid and sustained profitability. Growth in the net profit
was reduced by 12.2 per cent as a result of currency effects
amounting to CHF 74 million.
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,
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