Kuehne & Nagel International Ag · SIX:KNIN

Kuehne & Nagel International — Kuehne + Nagel International — FY2018 Earnings Presentation

36 slides from Kuehne & Nagel International's earnings presentation, Feb 27, 2019

  1. Slide 1: Analyst conference – Full-year 2018 results

    Analyst conference – Full-year 2018 results Kuehne + Nagel International AG 27 February 2018 (CET 14.00) | Schindellegi, Switzerland

  2. Slide 2: Forward-looking statements

    Forward-looking statements This presentation contains forward-looking statements. Such statements are subject to risks and uncertainties as various factors, many of which are beyond the control of Kuehne + Nagel International AG, may cause actual development and results to differ materially from the

  3. Slide 3: Kuehne + Nagel increases annual results

    Kuehne + Nagel increases annual results Group earnings grow to CHF 772 million in 2018 Strong volume increase in Seafreight of 7.7%, 335,000 TEUs Strong volume increase in Airfreight of 11.0%, 173,000 tons Substantial net turnover growth in Overland of 13.1% Strong net turnover growth in Contract Lo

  4. Slide 4: Overview Group performance full-year 2018

    Overview Group performance full-year 2018 Net Turnover Gross Profit 20,774 7,709 18,594 + CHF 2,180 m 7,023 + CHF 686 m + 11.7% + 9.8% 2017 2018 2017 2018 EBIT Earnings per Share (basic) 937 987 6.43 + CHF 50 m 6.16 + CHF 0.27 + 5.3% + 4.5% 2017 2018 2017 2018 27.02.2019 | © Kuehne + Nagel | Analyst

  5. Slide 5: 2018 quarters at a glance

    2018 quarters at a glance Q1 Good start Q2 Q2Successful – successful GP GP ++ 12% 12% GP + 14% GP + 12% Signs of trade conflicts Robust market dynamics Signs of trade conflicts EBIT EBIT + EBIT + 13% 13% Strong performance EBIT + 9% Start strategy rollout Strong performance Q3 Solid Q4 Challenging G

  6. Slide 6: December 2018 – a closer look

    December 2018 – a closer look Markets down in December Measures taken GP + 14% Industries struggle Safeguarding profitability EBIT + 9%  High Tech  Adapting transport capacity  Automotive  Initiating cost reductions  Retail  Accelerating efficiency improvements GP + 5% Weaker Europe export tra

  7. Slide 7: Seafreight Airfreight

    Seafreight Airfreight No. 1 worldwide No. 2 worldwide Significant business wins with Acquisitions enhance performance new platform KN ESP and deliver growth Continued pressure on gross profit margin partially offset by operational leverage Success with new industry solutions 27.02.2019 | © Kuehne

  8. Slide 8: Seafreight and Airfreight – strong volume growth

    Seafreight and Airfreight – strong volume growth 1'300 700 1'230 1'210 650 1'200 1'171 1'118 1'120 600 1'089 1'079 1'100 1'048 1'028 550 1'000 500 TEUs '000 Tons '000 450 900 448 441 439 441 422 400 800 381 391 350 362 350 700 300 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2017 2017 2017 2018 2018 2018 20

  9. Slide 9: Seafreight – yield down due to mix

    Seafreight – yield down due to mix 400 350 332 328 327 324 331 321 311 311 313 300 (237) (241) 250 (232) (225) (229) (229) (232) (217) (219) 200 GP/TEU in CHF Exp/TEU in CHF 150 100 91 96 98 EBIT/TEU in CHF 100 95 90 94 92 81 50 - Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2017 2017 2017 2018 2018 2018 20

  10. Slide 10: Airfreight – strong yield offsets mix

    Airfreight – strong yield offsets mix 80 69 69 70 70 68 67 70 66 65 64 60 (50) (51) 50 (47) (48) (48) (46) (46) (45) (46) 40 GP/100 kg in CHF Exp/100 kg in CHF 30 23 EBIT/100 kg in CHF 21 21 20 20 19 19 19 19 20 10 - Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2017 2017 2017 2018 2018 2018 2018 27.02.2019

  11. Slide 11: Quick acquisition

    Quick acquisition 27.02.2019 | © Kuehne + Nagel | Analyst Conference 11

  12. Slide 12: Entering time-critical logistics solutions

    Entering time-critical logistics solutions  A global market leader in time-critical shipments  High-growth verticals in the business unit Airfreight:  Aerospace - Sterling  Healthcare & Pharma - Quick STAT  Reasoning:  Enter into the premium, high growth and high yield segment of time-critical

  13. Slide 13: Quick International Courier, USA – key figures

    Quick International Courier, USA – key figures  Effective December 31, 2018  Revenue of approx. CHF 230 million  500.000 shipments p.a.  More than 550 employees  Four control towers in the USA and two control towers in Europe supported by eleven support centers in Europe, South America, Middle

  14. Slide 14: Overland

    Overland Strong performance of US intermodal business Leverage of top line growth driving significant profitability improvement 27.02.2019 | © Kuehne + Nagel | Analyst Conference 14

  15. Slide 15: Overland – outstanding performance

    Overland – outstanding performance Income statement YTD YTD Variance in CHF million Dec 2017 Dec 2018 2018/2017 Growth Forex1 Net turnover 3,117 3,526 13.1% 10.1% 3.0% Gross profit 952 1,088 14.3% 10.7% 3.6% EBITDA 92 118 28.3% 25.9% 2.4% EBIT 49 76 55.1% 52.9% 2.2% EBITDA / Net turnover margin 3.0%

  16. Slide 16: Contract Logistics

    Contract Logistics Significant growth with e-commerce fulfilment solutions Rollout of new WMS-solution and warehousing technology ongoing 27.02.2019 | © Kuehne + Nagel | Analyst Conference 16

  17. Slide 17: Contract Logistics – reshaping the business

    Contract Logistics – reshaping the business Income statement YTD YTD Variance in CHF million Dec 2017 Dec 2018 2018/2017 Growth Acquisition Forex1 Net turnover 4,814 5,249 9.0% 5.6% 1.5% 1.9% Gross profit 3,619 3,937 8.8% 6.5% 0.4% 1.9% EBITDA 288 270 (6.3%) (9.0%) 0.3% 2.4% EBIT 161 138 (14.3%) (15

  18. Slide 18: Income Statement

    Income Statement 2017 2017 2017 2017 YTD Dec 2018 2018 2018 2018 YTD Dec Variance Variance in % CHF million Q1 Q2 Q3 Q4 2017 Q1 Q2 Q3 Q4 2018 2018/2017 Q1 Q2 Q3 Q4 2018/2017 Growth Acquisition Forex 1 Net turnover 4,299 4,516 4,710 5,069 18,594 4,862 5,204 5,295 5,413 20,774 2,180 563 688 585 344 11

  19. Slide 19: eTouch – driving automation and leveraging technology

    eTouch – driving automation and leveraging technology  eTouch efforts: primarily a response to expected ongoing structural margin pressure for less complex, lower service business volumes.  Shipments will be deemed ‘eTouch’ when conversion rates are successfully expanded to c.60-80% through techno

  20. Slide 20: Defining eTouch

    Defining eTouch Addressable shipments represent c.20-45% of sea and airfreight portfolios Extension of service and complexity eTouch volume targets for 2022 Addressable, % of base c.20% c.45% Convert to eTouch, % of addressable c.10-20% c.20-40% % of total base c.2-4% c.10-20% Absolute volume c.135-

  21. Slide 21: Applying eTouch

    Applying eTouch Contingent on technology and automation Extension of service and complexity Unit Gross Profit Target Conversion (CHF)* Technology and automation Rate - 2022 (EBIT/GP) Total volume 300- 320 65-75 30% 60- 60-70 65-75 80% eTouch addressable *For seafreight and airfreight, respectively,

  22. Slide 22: Balance Sheet

    Balance Sheet December 31, December 31, December 31, December 31, CHF million 2017 2018 2017 2018 Assets Liabilities and equity Property, plant and equipment 1'249 1'226 Equity attributable to the equity holders 2'321 2'318 of the parent company Goodwill 849 1'170 Other intangibles 96 215 Non-contro

  23. Slide 23: Impact IFRS 16 effective 1.1.2019

    Impact IFRS 16 effective 1.1.2019 December 31, CHF million Change CHF million Change 2018 Balance Sheet - Income Statement - Opening balance effect Expected full-year effect 2019 Right of use assets 5 + 1'700 to 1'800 Selling, general and admin expenses - 420 to - 460 Deferred tax assets 175 < 10 EB

  24. Slide 24: Cash and cash equivalents

    Cash and cash equivalents YTD Dec YTD Dec CHF million Variance 2017 2018 Cash and cash equivalents 1.1.2018, net 837 710 (127) Operational cash flow 1,148 1,156 8 Changes in working capital (128) (260) (132) Main variances 2018 vs. 2017  Lower cash opening balance CHF (127) million Income taxes pai

  25. Slide 25: Working Capital

    Working Capital Dec 31 Dec 31 Better/(worse) CHF million 2017 2018 2018 vs. 2017 Trade receivables/Contract assets/Work in progress 4,017 4,238 (221) Trade payables/Contract liabilities/Accrued trade expenses (3,197) (3,160) (37) Net working capital 820 1,078 (258) KPIs: Working capital intensity 3.

  26. Slide 26: Return on capital employed (EBIT)

    Return on capital employed (EBIT) ROCE ROCE excl. acquisitions 80% 75% 69% 70% 67% 67% 66%  IFRS 16 impact 1.1.2019: + 1% 65% 65% 68% 67% 63% 66% 60%  Mix effect: 64% 58% 62% Stronger growth in Contract 60% 60% 55% 57% Logistics leads to higher asset allocation in proportion to Sea 50% 52% and Air

  27. Slide 27: Financial targets

    Financial targets Dec Targets KN Market CHF million 2018 2022 2019 2019 GROUP SEAFREIGHT Conversion rate 13% 16% Volume growth > 5% 2 to 3% ROCE (excl. acquisitions) 58% 70% AIRFREIGHT Effective tax rate 22% ~ 22 - 23% Volume growth > 2% 0 to 1% Working capital intensity 4.1% 3.5 - 4.5% OVERLAND Cas

  28. Slide 28: Shareholder value

    Shareholder value Dividend proposal 2018: Dividend per share CHF 6.00 Dividend payout ratio: 93.3% 2013 2014 2015 2016 2017 2018 Share price in CHF 31.12. 117.10 135.30 137.80 134.60 172.50 126.35 Market capitalisation in CHF million 31.12. 14'052 16'236 16'536 16'152 20'700 15'162 Dividend per shar

  29. Slide 29: Outlook 2019

    Outlook 2019 Unpredictable trade conditions Cost control to ascertain leverage Fast changing markets Technology as a game changer Indicators signal lower growth Organic growth strategy confirmed 27.02.2019 | © Kuehne + Nagel | Analyst Conference 29

  30. Slide 30: Slide 30

  31. Slide 31: Upcoming events 2019

    Upcoming events 2019 11.-25.04.2019 Closed period Q1 25.04.19 Three-months 2019 results AGM 07.05.19 Annual General Meeting 09.-23.07.2019 Closed period Q2 23.07.19 Half-year 2019 results 08.-22.10.2019 Closed period Q3 22.10.19 Nine-months 2019 results 02.01.-27.02.2020 Closed period Q4 27.02.20 Fu

  32. Slide 32: Quarter over Quarter 2018/2017

    Quarter over Quarter 2018/2017 CHF million 2018 2017 2018 / 2017 Change in % 2018 / 2017 Change in mCHF Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL 1. Seafreight A) Income Statement Turnover 2,170 2,166 2,532 2,498 9,366 2,095 2,167 2,284 2,259 8,805 +3.6 (0.0) +10.9 +10.

  33. Slide 33: Quarter over Quarter 2018/2017

    Quarter over Quarter 2018/2017 2018 2017 2018 / 2017 Change in % 2018 / 2017 Change in mCHF CHF million Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL 3. Overland A) Income Statement Turnover 936 1,104 938 1,031 4,009 794 826 822 914 3,356 +17.9 +33.7 +14.1 +12.8 +19.5 142 2

  34. Slide 34: Quarter over Quarter 2018/2017

    Quarter over Quarter 2018/2017 CHF million 2018 2017 2018 / 2017 Change in % 2018 / 2017 Change in mCHF Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL 5. Kuehne + Nagel Group A) Income Statement Turnover 5,795 6,143 6,349 6,538 24,825 5,185 5,390 5,633 6,012 22,220 +11.8 +14

  35. Slide 35: Kuehne + Nagel International AG

    Kuehne + Nagel International AG Dorfstrasse 50 | 8834 Schindellegi | Switzerland | Telephone +41 (0)44 786 95 11 | www.kuehne-nagel.com

  36. Slide 36: Contact

    Contact Markus Blanka-Graff Christopher Combé Andrea Kobi CFO Head of Investor Relations Investor Relations markus.blanka@kuehne-nagel.com christopher.combe@kuehne-nagel.com andrea.kobi@kuehne-nagel.com Tel: +41 (0)44 7869 644 Tel: +41 (0)44 7869 693 Tel: +41 (0)44 7869 561 Disclaimer Investing in t

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