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Supply Chain

Kuehne & Nagel Lifts Profit Forecast as Freight Shift Pays Off

Kuehne & Nagel International AG’s third- quarter operating profit rose 9 percent as the freight forwarder shifted to more lucrative U.S. sea-cargo markets and focused on high-margin contracts, prompting the company to strengthen its profitability target for 2015.

Earnings before interest and taxes increased to 230 million Swiss francs ($239 million) from 211 million francs a year earlier, Schindellegi, Switzerland-based Kuehne & Nagel said Tuesday.

Profit beat the 221.2 million-franc average of five analyst estimates compiled by Bloomberg. Nine-month Ebit amounted to 5.2 percent of revenue, and the company said it may exceed a full-year goal of 5 percent for the margin.

Economic growth has been slower in Europe than elsewhere, and August exports out of Germany, the region’s biggest economy, fell the most since 2009. As China’s international trade slowed as the country’s economic growth weakened, Kuehne shifted its ocean-freight unit’s focus to the U.S. import market and away from Asian exports.

“Our strong focus on innovative logistics services and strict cost management enabled growth in profits in a demanding market environment,” Chief Executive Officer Detlef Trefzger said in a statement.

Air-freight volume handled by Kuehne & Nagel in the first nine months rose 5.1 percent. While sea freight volume declined 1.1 percent, gross profit per container rose 4.4 percent.

Kuehne & Nagel shares have fallen 1.9 percent this year, less than the 5.1 percent drop in the 19-member Bloomberg Europe Transportation Index, valuing the company at 16 billion francs.

Kuehne reduced its full-year forecast for global sea- freight volume in April to growth of 3 percent to 4 percent, predicting its sea-freight handling will be in line with market developments. The company has declined to reiterate that forecast since then because of volatility of rates and volumes.

Exchange-rate shifts cut nine-month operating profit by 7.9 percent, Kuehne & Nagel said. The Swiss National Bank abandoned a cap on the franc’s value against the euro in January, causing the country’s currency to surge.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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