Kuehne & Nagel International Ag · SIX:KNIN
Kuehne & Nagel International — Kuehne + Nagel International — FY2006 Earnings Presentation
63 slides from Kuehne & Nagel International's earnings presentation, Mar 12, 2007
Slide 1: Result 2006 – Analyst Conference
Result 2006 – Analyst Conference March 12, 2007
Slide 2: Klaus Herms, CEO; Gerard van Kesteren, CFO
Klaus Herms, CEO Gerard van Kesteren, CFO Result 2006 21/03/2007 p. 2
Slide 3: Agenda
Agenda • Welcome and Highlights 2006 Gerard van Kesteren • Operating Review 2006 Klaus Herms • Financial Review 2006 Gerard van Kesteren • Outlook 2007 Klaus Herms Result 2006 21/03/2007 p. 3
Slide 4: The Global Logistics Network
The Global Logistics Network • Over 46’000 employees • 830 locations in more than 100 countries • Ownership of the global network • Non-asset based in Sea & Air and Rail & Road Logistics; 18% of logistic centers company owned • Turnover 2006: CHF 18.2 billion; EBITDA: CHF 855 million Result 2006 21/
Slide 5: Performance Total Group
Performance Total Group Change CHF million 2004 2005 2006 06/05 Invoiced turnover 11'563 14'049 18'194 30% Forwarding expenses (9' 241) (11' 280) (12' 942) Gross profit 2'323 2'769 5'253 90% Gross profit-Margin 20.1% 19.7% 28.9% Total expenses (1' 849) (2' 208) (4' 397) EBITDA 474 562 855 52% EBITDA
Slide 6: Segment Reporting
Segment Reporting By Business Unit Turnover Gross Profit EBITDA CHF million 2005 2006 2005 2006 2005 2006 Variance - Seafreight 7' 503 8' 306 944 1' 138 264 373 41% - Airfreight 3' 011 3' 386 527 599 139 166 19% - Rail & Road Logistics 2' 095 2' 474 400 458 29 37 26% - Contract Logistics 1' 333 3' 9
Slide 7: Highlights 2006
Highlights 2006 CHF million 2004 2005 2006 - Gross Profit 2' 323 2' 769 5' 253 - EBITDA 474 562 855 - Net earnings 238 315 458 - Cash & cash Equivalents 398 1' 125 600 Per share - EPS 2.09 2.87 3.90 - Dividend 0.90 1.10 1.50 Equity % Total assets 28.2 37.9 34.6 Operational Cash Flow 488 575 857 Resu
Slide 8: Shareholders Structure Kuehne + Nagel December 2006
Shareholders Structure Kuehne + Nagel December 2006 Kuehne Holding 55.75% Free float 42.34% Treasury shares 1.91% Result 2006 21/03/2007 p. 8
Slide 9: Organization and Management Structure
Board of Directors Chief Executive Officer K. Herms Information Sea & Air Contract Rail & Road Chief Financial Human Systems & Logistics Logistics Logistics Officer Resources Technology R. Lange D. Reich E. Kaiser G. van Kesteren M. Kolbe A. Schmid-Lossberg Regional Management Europe South North Sou
Slide 10: Main events 2006
Main events 2006 • Consolidation Logistics Industry • Kuehne + Nagel Result 2006 21/03/2007 p. 10
Slide 11: Consolidation in the Logistics Industry
Consolidation in the Logistics Industry Kuehne + Nagel ACR DHL Exel Schenker Bax Global DSV Frans Maas PWC / Agility Geologistics Panalpina IPO Apollo Management TNT Logistics / CEVA Geodis TNT Freight Mgt (Ex-Wilson) Result 2006 21/03/2007 p. 11
Slide 12: Key events Kuehne + Nagel 2006
Key events Kuehne + Nagel 2006 Business • Excellent Performance Sea & Air Logistics • Integration ACR Acquisition successfully completed with strong organic growth in Contract Logistics • Continued build up of European Logistics Network Finance • Capex below Budget • Improved Net Working Capital con
Slide 13: Positioning of Logistics Providers
Positioning of Logistics Providers Complexity low high Contract Logistics Global Full Service Provider high high low low Classical local forwarder Global Forwarder low high Global Coverage Result 2006 21/03/2007 p. 13
Slide 14: Financial Performance 2000 – 2006: Turnover, Gross Profit
Financial Performance 2000 – 2006 (CHF million) Turnover Gross Profit 18'194 20'000 6'000 5'253 18'000 14'049 16'000 5'000 14'000 11'563 4'000 12'000 9'548 8'805 2'769 8'247 8'435 10'000 3'000 2'323 2'064 8'000 1'911 1'727 2'000 1'453 6'000 4'000 1'000 2'000 0 0 00 01 02 03 04 05 06 00 01 02 03 04 0
Slide 15: Financial Performance 2000 – 2006: EBITDA, Net Earnings
Financial Performance 2000 – 2006 (CHF million) EBITDA Net Earnings 500 458 855 450 900 800 400 315 700 350 562 600 300 238 475 500 415 250 196 362 160 161 400 200 126 300 150 200 100 100 50 0 0 02 03 04 05 06 0 1 * 3 4 5 6 20 20 20 20 20 20 0 20 0 20 0 2 20 0 20 0 20 0 20 0 * Excl. impairment Resul
Slide 16: Financial Performance 2006: EBIT
Financial Performance 2006 (CHF million) EBIT 400 345 350 300 250 200 151 150 64 100 40 16 50 (15) - (50) Se a Ai r ad tic s t e nc e o is sta ra il &R og a l E su Ra ct L Re In a nt r Co Result 2006 21/03/2007 p. 16
Slide 17: Industry Dynamics
Industry Dynamics Accelerating Globalization Logistics Outsourcing Reallocation Production Facilities Consolidation via Global providers Continously increased IT requirements Result 2006 21/03/2007 p. 17
Slide 18: Competitive Environment 2006
Competitive Environment 2006 Business Field - Seafreight 1 2 3 4 - - Airfreight 4 1 2 3 - - Contract Logistics 3 1 5 - 2 - European Overland 7 2 1 - - Result 2006 21/03/2007 p. 18
Slide 19: Seafreight
KUEHNE+NAGEL San Se ~ si ENTE (IL Ai Jt ee Seafreight i = it WwW GE SPs Rostock womans = PEKING SENATOR —
Slide 20: World Container Traffic
World Container Traffic 180 155 160 145 137 140 128 120 120 110 Million TEU 99 100 89 79 80 71 68 60 40 20 0 00 001 002 003 004 005 006 07E 08E 09E 10E 20 2 2 2 2 2 2 20 20 20 20 Result 2006 21/03/2007 p. 20
Slide 21: Seafreight TEU performance 2000-2006
Seafreight TEU performance 2000-2006 2'500 2'275 1'910 2'000 1'600 TEU '000 1'500 1'261 1'009 1'000 800 850 500 0 00 01 02 03 04 05 06 20 20 20 20 20 20 20 Result 2006 21/03/2007 p. 21
Slide 22: Performance Business Field Seafreight
Performance Business Field Seafreight Change CHF million 2004 2005 2006 05/06 Invoiced turnover 6'111 7'503 8'305 11% Forwarding expenses (5' 330) (6' 559) (7' 167) Gross profit 781 944 1'138 21% Gross profit-Margin 12.8% 12.6% 13.7% Total expenses (577) (680) (765) EBITDA 204 264 373 41% EBITDA-Mar
Slide 23: Performance Business Field Seafreight
Performance Business Field Seafreight 2006 Review • Growth double the market (19% vs 9%), while maintaining Gross Profit Margin • Ongoing cost management reflects material leverage effect, resulting in EBIT margin at record level of 4.2% 2007 Outlook • Continued imbalanced Trade lane esp. ASIA-EUR-A
Slide 24: Market Position Seafreight
Market Position Seafreight Revenue in CHF million K+N‘s preferred carriers: Maersk Line 7' 000 MSC Hapag Lloyd 6' 000 CMA 5' 000 4' 000 3' 000 2' 000 1' 000 0 UPS SCS DHL Kuehne+Nagel Nippon Express Panalpina Schenker Expeditors UTi Worldwide Sinotrans Agility YTD SEP 2005 YTD SEP 2006 Source: KN es
Slide 25: Airfreight
KUEHNE+NAGEL Airfreight
Slide 26: Airfreight Ton performance 2000-2006
Airfreight Ton performance 2000-2006 800 720 654 700 600 600 495 500 500 450 Ton '000 400 360 300 200 100 0 00 01 02 03 04 05 06 20 20 20 20 20 20 20 Result 2006 21/03/2007 p. 26
Slide 27: Performance Business Field Airfreight
Performance Business Field Airfreight Change CHF million 2004 2005 2006 05/06 Invoiced turnover 2'601 3'010 3'386 13% Forwarding expenses (2' 125) (2' 483) (2' 788) Gross profit 476 527 598 14% Gross profit-Margin 18.3% 17.5% 17.7% Total expenses (350) (388) (433) EBITDA 126 139 165 19% EBITDA-Margi
Slide 28: Performance Business Field Airfreight
Performance Business Field Airfreight 2006 Review • Growth double the market (10% vs. 4.6%) with stable Gross Profit margin • Via ongoing cost management, EBIT margin at record level of 4.5% 2007 Outlook • Market Growth 5% • Overall difficult rate environment Result 2006 21/03/2007 p. 28
Slide 29: Market Position Airfreight
Market Position Airfreight Revenue in CHF million K+N‘s preferred carriers: Lufthansa 6' 000 Air France / KLM Cargolux 5' 000 Emirates 4' 000 3' 000 2' 000 1' 000 0 UPS SCS DHL EGL Kuehne+Nagel Nippon Express KWE Panalpina Schenker Expeditors Sinotrans YTD SEP 2005 YTD SEP 2006 Source: KN estimate /
Slide 30: Rail & Road Logistics
KUEHNE+NAGEL Hi KUEHNE AGEL Rail & Road Logistics
Slide 31: Performance Business Field Rail & Road Logistics
Performance Business Field Rail & Road Logistics Change CHF million 2004 2005 2006 05/06 Invoiced turnover 1'588 2'094 2'474 18% Forwarding expenses (1' 311) (1' 694) (2' 016) Gross profit 277 400 458 14% Gross profit-Margin 17.4% 19.1% 18.5% Total expenses (236) (371) (421) EBITDA 41 29 37 25% EBIT
Slide 32: Performance Business Field Rail & Road Logistics
Performance Business Field Rail & Road Logistics 2006 Review • Volume / Revenue Growth 18% of which forex 2%, Acquisition 8% and organic growth 8% • Slight improvement of EBITDA margin to 1.5% • Accelerated amortisation of intangibles of € 40 million 2007 Outlook • Hub system connecting 80 K+N stati
Slide 33: Hub Concept
Hub Concept Result 2006 21/03/2007 p. 33
Slide 34: Market Position Rail & Road Logistics
Market Position Rail & Road Logistics Revenue in CHF million 7' 000 6' 000 5' 000 4' 000 3' 000 2' 000 1' 000 0 DHL Kuehne+Nagel Schenker Dachser Geodis Thiel Logistics DSV Gefco Ziegler ABX YTD SEP 2005 YTD SEP 2006 Source: KN estimate / Quarterly reports Result 2006 21/03/2007 p. 34
Slide 35: Contract Logistics
KUEHNE+NAGEL Contract Logistics
Slide 36: Performance Business Field Contract Logistics
Performance Business Field Contract Logistics CHF million 2005 2006 Change Invoiced turnover 1'333 3'916 194% Forwarding expenses (468) (898) Gross profit 865 3'018 249% Gross profit-Margin 64.9% 77.1% Total expenses (795) (2' 830) EBITDA 70 188 169% EBITDA-Margin 5.3% 4.8% Depreciation (28) (84) Am
Slide 37: Performance Business Field Contract Logistics
Performance Business Field Contract Logistics 2006 Review • ACR integration as per plan • 15% organic growth of traditional K+N business with impact on short term profitability • Material part of 2006 growth realised with existing customers moving into new markets • EBIT margin excl. amortisation /
Slide 38: Update ACR Integration
Update ACR Integration • Integration of this complementary acquisition covering Contract Logistics in 11 european countries with app. 15’000 staff finalised • No main customer / key staff left • New customer contracts have been signed with ACR customers outside the 11 country territory and a further
Slide 39: Market Position Contract Logistics
Market Position Contract Logistics Revenue in CHF million 14' 000 12' 000 10' 000 8' 000 6' 000 4' 000 2' 000 0 UPS SCS DHL Kuehne+Nagel Fiege Schenker Ceva Logistics Wincanton UTi Worldwide Agility Ryder YTD SEP 2005 YTD SEP 2006 Source: KN estimate / Quarterly reports Result 2006 21/03/2007 p. 39
Slide 40: Performance Business Field Real Estate
Performance Business Field Real Estate CHF million 2005 2006 Change Invoiced turnover 6 4 (33% ) Forwarding expenses 0 0 Gross profit 6 4 (33% ) Total expenses 42 71 EBITDA 48 75 56% Depreciation (16) (30) Amortisation Intangibles 0 (5) EBIT 32 40 25% Result 2006 21/03/2007 p. 40
Slide 41: Performance Business Field Real Estate
Performance Business Field Real Estate 2006 Review • New business field as of 2006, with comparable figures 2005 • Objective to create more transparancy and secure arm-length intercompany pricing • Capital employed of app. CHF 850 million represents ownership of 18% of logistic units 2007 Outlook •
Slide 42: Consolidated Financial Statements 2006
Consolidated Financial Statements 2006
Slide 43: Basis for Consolidation 2006
Basis for Consolidation 2006 • As per International Reporting Standards (IFRS) • Income statement and cash flow at average rates • Balance sheet at year-end rates • Impairment intangibles CHF 6.4 million • IFRS 3 “Business Combinations” adopted since 2004 Result 2006 21/03/2007 p. 43
Slide 44: Currency Development CHF
Currency Development CHF Feb 2003 2004 2005 2006 2007 Balance Sheet Euro 1.56 1.54 1.56 1.61 US Dollar 1.24 1.13 1.32 1.22 Income Statement Euro 1.52 1.55 1.55 1.58 1.62 US Dollar 1.34 1.24 1.24 1.26 1.23 Result 2006 21/03/2007 p. 44
Slide 45: Main Changes in Consolidation Scope 2006
Main Changes in Consolidation Scope 2006 • ACR Group of companies mainly allocated to Contract Logistics • Greece now 100% Kuehne + Nagel subsidiary • Baltic / E.M. Trans • Cuba / Flete Caribe SA Result 2006 21/03/2007 p. 45
Slide 46: Income Statement
Income Statement CHF million 2004 2005 2006 Turnover 11' 563 14' 049 18' 194 30% Gross profit 2' 323 2' 769 5' 253 90% EBITDA 474 562 855 52% EBIT * 318 429 601 40% Net earnings 238 315 458 46% % Turnover 2.1% 2.2% 2.5% * incl. amort. intangibles / goodwill 64 50 104 Result 2006 21/03/2007 p. 46
Slide 47: Segment Reporting
Segment Reporting By Business Unit Turnover Gross Profit EBITDA CHF million 2005 2006 2005 2006 2005 2006 Variance - Seafreight 7' 503 8' 306 944 1' 138 264 373 41% - Airfreight 3' 011 3' 386 527 599 139 166 19% - Rail & Road Logistics 2' 095 2' 474 400 458 29 37 26% - Contract Logistics 1' 333 3' 9
Slide 48: Segment Reporting
Segment Reporting By Region Turnover Gross Profit EBITDA CHF million 2005 2006 2005 2006 2005 2006 Variance - Europe 8' 578 12' 092 1' 613 3' 924 291 529 82% - Americas 3' 297 3' 601 729 824 123 154 25% - Asia Pacific 1' 344 1' 541 322 386 125 155 24% - Middle East, Africa 829 960 105 119 22 17 (22%
Slide 49: Reconciliation (CHF Mio.)
Reconciliation (CHF Mio.) Organic 2005 Forex Acq. 2006 Growth Turnover 14'049 316 2' 580 1' 249 18'194 Gross profit 2'769 97 1' 933 453 5'253 EBITDA 562 15 151 128 855 EBIT 429 9 42 121 601 EBT 446 602 Net earnings 315 458 Staff 25'607 - 14' 105 6' 578 46'290 Result 2006 21/03/2007 p. 49
Slide 50: Impact Acquisitions 2006 (CHF Mio.)
Impact Acquisitions 2006 (CHF Mio.) Rail & Contract Real Sea Air Total Road Logistics Estate Turnover 22 6 170 2' 383 0 2'580 Gross profit 2 1 27 1' 902 0 1'932 EBITDA 1 0 7 112 31 151 Depreciation 0 0 0 (47) (8) (55) Amortisation (3) 0 (14) (31) (5) (53) EBIT (2) 0 (8) 34 18 42 Staff 19 10 297 13'
Slide 51: Development Working Capital Kuehne + Nagel Group
Development Working Capital Kuehne + Nagel Group CHF Mio 2004 2005 2006 A/R 1'277 1'713 2'259 Work in progress 211 271 283 Subtotal 1' 488 1' 984 2' 542 A/P (619) (830) (1' 111) Accrued Expenses (498) (626) (853) Net Working Capital 371 528 578 % of Revenue 3.2% 3.8% 3.2% KPI' s - DSO 35.6 38.8 41.4
Slide 52: Capital Expenditure in fixed assets
Capital Expenditure in fixed assets CHF Mio 2004 2005 2006 - Europe 85 163 189 - Americas 10 14 38 - Asia Pacific 5 7 15 - Middle East/Central Asia and Africa 8 5 5 Total fixed assets 107 189 246 Sea 11 15 13 Air 10 13 5 Rail & Road 20 23 24 Contract Logistics 15 38 92 Real Estate 51 100 112 Total f
Slide 53: Return on Capital Employed 2006
Return on Capital Employed 2006 CHF mio Capital ROCE EBIT Employed • Seafreight 345 135 > 100% • Airfreight 151 157 96.3% • Rail & Road (15) (24) - • Contract Logistics 64 542 11.8% • Real Estate 40 851 4.7% • Insurance Brokers 16 15 > 100% TOTAL 601 1'677 35.8% Result 2006 21/03/2007 p. 53
Slide 54: Concept Amortisation of Intangibles
Concept Amortisation of Intangibles IFRS 3 “Business Combination” applicable as of 1-4-2004 does not allow any more to amortise Goodwill over a number of years. However Goodwill, representing the Purchase Price minus Net Asset Value of a Target, can be (partly) allocated as Intangible Assets and amo
Slide 55: Amortisation of Intangibles
Amortisation of Intangibles Actual Plan CHF mio 2005 2006 2007 * - Seafreight 6 10 10 - Airfreight 6 9 6 - Rail & Road 29 40 15 - Contract Logistics 9 40 35 - Real Estate - 5 5 TOTAL 50 104 71 * without impact of new acquisitions Result 2006 21/03/2007 p. 55
Slide 56: Corporation Tax
Corporation Tax CHF Mio 2004 2005 2006 - Earnings before Tax 344 445 601 - Tax charge 103 127 142 - Effective Tax Rate 30% 28% 24% Result 2006 21/03/2007 p. 56
Slide 57: Financial Targets 2007
Financial Targets 2007 • Continue to distribute 40% as Dividend • Net Working Capital at app. 3.5% of Revenue • Capex capped at Depreciation/Amortisation current year • Tax rate 26 - 27% Result 2006 21/03/2007 p. 57
Slide 58: Corporate Timetable 2007
Corporate Timetable 2007 Date 12.03.2007 - Press Conference 2006 result - Analyst Conference 2006 result 23.04.2007 Q1 2007 result 02.05.2007 Annual General Meeting 10.05.2007 Dividend payout 24.07.2007 Q2 2007 result 23.10.2007 Q3 2007 result Result 2006 21/03/2007 p. 58
Slide 59: Next Main Events
Next Main Events: • 23.04.07 Q1 2007 result • 27.04.07 Kühne + Nagel Investor’s day Result 2006 21/03/2007 p. 59
Slide 60: Investor's Day, Friday 27. April 2007
Investor‘s Day, Friday 27. April 2007 UBS Conference Center London Tim e Presentation Speaker 09:30 Registration and Welcome Coffee 10:00 General Introduction Klaus Herms / Gerard van Kesteren 10:30 Customer presentation: Scottish New castle Guest Speaker 11:00 Refreshment Break 11:20 Rail & Road Lo
Slide 61: Outlook 2007
Outlook 2007 General • Focus specificly on “BRIC” countries (Brazil, Russia, India, China) • Utilize the cross selling potential between the Business Units • Continue to implement Kuehne+Nagel’s IT strategy Sea & Air Logistics • Double the market growth with stabil operating margins Rail & Road Logi
Slide 62: Disclaimer
Disclaimer Investing in the shares of Kuehne + Nagel International Ltd. involves risks. Prospective investors are strongly requested to consult their investment advisors and tax advisors prior to investing in shares of Kuehne + Nagel International Ltd. This document contains forward-looking statemen
Slide 63: Kuehne+Nagel
KUEHNE+NAGEL
Kuehne + Nagel International — FY2006 Earnings Presentation on 6ix