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• Group EBIT: CHF455 million in Q3, with nonrecurring items.

• Sea Logistics EBIT: CHF256 million in Q3, up from CHF206 million in Q2 and CHF236 million in Q3 last year.

• Air Logistics EBIT: CHF120 million in Q3, compared to CHF122 million in Q2 and CHF136 million a year ago.

• Road Logistics EBIT: CHF22 million in Q3, compared to CHF39 million in Q2 and CHF26 million last year.

• Contract Logistics EBIT: CHF57 million in Q3, up from CHF52 million in Q2 and CHF48 million a year ago.

• Free Cash Flow: Approximately CHF300 million in Q3.

• Free Cash Flow Conversion: 85% to net income before minorities in Q3.

• Gross Profit Growth (Contract Logistics): 10% year-on-year in Q3, up from 8% in Q2.

• Recurring OpEx (Sea Logistics): Declined by 5% quarter-on-quarter to CHF292 million.

• Air Logistics Volume Growth: 7% year-on-year in Q3, 5% on an organic basis.

• Road Logistics Shipment Volume Growth: 8% year-on-year in Q3.

• Net Working Capital Intensity: 4.3% by the end of September, up from 3.3% in 2023.

• Warning! GuruFocus has detected 5 Warning Signs with CME.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Kuehne + Nagel International AG (KHNGF) achieved a sequential improvement in group EBIT in Q3, marking the first year-over-year quarterly increase in two years.

• The company reported a significant reduction in unit costs for sea logistics and stable costs for air logistics, driven by ongoing cost control efforts.

• Contract Logistics showed solid EBIT growth, with a notable increase in market share in key healthcare and e-commerce segments.

• The company successfully migrated its core transport management system to the cloud, enhancing its technological capabilities.

• Kuehne + Nagel International AG (KHNGF) has streamlined its management structure and refocused its sales force, creating a solid platform for future growth.

Negative Points

• The company faced inflationary pressures that mitigated the benefits of cost-saving measures.

• Working capital expansion due to rising sea freight rates softened the effect on free cash conversion.

• The anticipated peak season did not meet expectations, partly due to front-loading of cargo demand.

• Air Logistics saw a modest increase in operating expenses, which offset gross profit growth.

• The Road Logistics segment experienced a relatively weak EBIT contribution during Q3, reflecting soft market conditions in core regions like Germany and France.

Q & A Highlights

Q: Can you provide insights on the current market growth for Sea and Air Logistics and how Kuehne + Nagel plans to address any market share losses? A: Stefan Paul, CEO, noted that seafreight volumes are growing between 4% and 5%, and airfreight around 5%. The difference in growth rates is attributed to the e-commerce sector, which Kuehne + Nagel serves primarily through Apex. The company plans to focus on organic growth by leveraging its new structure and enhancing customer focus to regain market share.