Panalpina first half profit plunges 78pc, outlook gloomy

SWISS logistics giant Panalpina has announced its first-half net profit plunged 78 per cent to CHF16.9 million (US$15.9 million) reflecting an industry-wide weakening of demand for air and sea freight.

"We do not anticipate a significant improvement in the global market environment or even a recovery in the global economy in the second half-year," the group said in a statement.

"When we look at our decline, it is greater than the market and it will be very hard to turn this around in the second half," CEO Monika Ribar told Reuters.

Eleven per cent of Panalpina's global workforce had been laid off and the savings will be fully reflected in second half results, said the company.

While Panalpina said it was committed to growing faster than the market, it would not pursue expansion at the expense of profitability.

"The market was also affected by a cut-throat price war, with transport prices well below cost," said a company statement.

The group also said it was on track to reach its cost-cutting target of CHF130 million in 2009 and that steps to cut costs had helped the group to boost its margins in the second quarter compared to the previous quarter.

"Thanks to strict cost management and a consistently implemented cost-cutting programme, the Panalpina Group succeeded in significantly reducing its cost base year-on-year and as a result was able to compensate for the fall in volume," said the statement.

"Compared to the prior-year period, free cash flow increased by 175 per cent, and compared to the first quarter of 2009, air freight volume rose in the second quarter of 2009 by three per cent and ocean freight by eight per cent," said the company.

(Source: www.schednet.com)