Helvea Swiss Equities Conference 2013

Transcription

1 January 17, Panalpina Group January 17, 2013 Helvea Swiss Equities Conference 2013

2 January 17, Review of 2012 a(nother) challenging year for freight markets Forecasts for growth in 2012 (vs. 2011) at various points in time 9% 6% 3% 0% Apr-11 Oct-11 Apr-12 Oct-12-3% Ocean Freight Air Freight Global GDP World Trade Forecasts for economic growth have continually trended down over the last 18 months Growth forecasts recently converging for GDP, Trade and Ocean Freight Air Freight losing out Source: IMF, IATA, Seabury, Drewry

3 January 17, Move to lean inventories and accelerated shift to other freight modes affecting the air freight market Move to lean inventories: inventory-to-sales ratio in U.S. Shift from air freight to air express accelerated during 2011/ % 30% Volume growth, yoy in % 20% 10% 0% -10% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 After the restocking boom in 2010, manufacturers began to minimize inventories again in the wake of the economic uncertainties fueled by the debt crises in the EU and the U.S. The int l express share of global air cargo expanded from 4% in 1992 to 14% in 2011, while the average express shipment size is estimated to have grown from 2.7kg (1992) to 6.2kg (2011). While the shift from air freight to other freight modes is not a new phenomenon, the trend seems to have accelerated over the last two years. Source: U.S. Department of Commerce, Boeing, Wolfe Trahan -20% -30% Forwarders Average Integrators Average Forwarder average includes EXPD, UTIW, DHL GF, KNIN and PWTN. Integrator average is a weighted average of UPS Int l Export, FDX Int l Priority, and DHL Express Time Definite Int l package volumes.

4 January 17, Weight per shipment in Air Freight decreasing, particularly in the Hi-Tech/Telecom segment Weight per Air Freight shipment (last 8 quarters; 4Q10 = 100) Industry Vertical exposure by weight in Air Freight (2011) % 95 22% 90 Automotive & Manufacturing Total Air Hi-Tech/Telecom 5% Chemicals Consumer, Retail & Fashion Healthcare Oil and Gas & Ind. Projects % 12% Hi-Tech & Telecom Other Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 5% 7% Panalpina Air Freight figures Panalpina Air Freight figures Trend to smaller/lighter shipments in air freight accelerated over the last two years, affecting revenues Approx. 36% of Panalpina s Air Freight tonnage in 2011 was generated with customers in the Hi-Tech/Telecom industries the segment which saw the sharpest contraction in weight per shipment

5 January 17, Structural changes in freight markets have led to growth anomaly in air freight vs. global GDP in 2011 and 2012 Global air freight vs. GDP: growth anomaly over last two years 6% 4% 2% Air freight shipment growth less volatile than tonnage growth 8% 6% 4% 2% 0% 1.1% Ø % -2% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12-2% -4% -4% -6% -4.3% Anomaly Growth differential Air Freight - Global GDP Air Freight market growth Global GDP growth -5.6% -6% -8% -10% -12% Air tonnage growth Air shipment growth Panalpina Air Freight figures (year-on-year growth in %) Air freight market developing well below global GDP over the last two years disconnect mainly driven by 1. Strongly declining weight per shipment in certain industries; 2. Move to lean inventories; 3. Accelerated shift from air freight to other freight modes (e.g. air express, ocean) Mid/long term: no reason why air freight should grow significantly below global GDP! Source: IMF, IATA, Seabury, Panalpina

6 January 17, Global container traffic also growing slower than previously million TEU E 2013E Global container traffic is forecast to grow 3.4% to a total of almost 170 million TEU in A growth rate of 4.9% is currently forecast for Core East-West trades continue to weaken: volumes on Asia-N. Europe and Asia-Mediterranean trade lanes forecast to decline by 1% and 11%, respectively, in Growth mainly coming from non-core trades and Intra-Asia. Source: Drewry Maritime Research (October 2012)

7 January 17, The logistics industry still offers many growth opportunities Global 3PL revenues (in US$ billion) Δ in % North America % Europe % Asia-Pacific % Latin America % Other Regions % Total market size % Source: Armstrong & Associates, 2012 *+5% when adjusted for FX fluctuations * Companies that use a 3PL (third-party logistics) provider Outsourced Logistics Service Percentage of companies globally International Transportation 76% Domestic Transportation 71% Warehousing 63% Freight Forwarding 53% Customs Brokerage 52% Reverse Logistics 26% Logistics expenditures represent an average of 12% of sales revenues for shippers, of which 39% is spent on outsourcing 65% of shippers are increasing their use of 3PL services 58% are reducing/consolidating the number of 3PL providers they use Fuel efficiency and carbon emissions are becoming more important decision factors for selecting 3PLs Cross-Docking Labeling, Packaging, Assembly Transportation Planning & Mgmt Inventory Management Freight Bill Auditing & Payment Order Management & Fulfillment IT Services Service Parts Logistics Customer Service Supply Chain Consultancy Fleet Management LLP / 4PL Services Environmental Footprint Services 25% 25% 22% 19% 18% 16% 13% 12% 10% 10% 8% 8% 6% Outsourcing trend and increasing customer requirements for end-to-end solutions to continue. Penetration rate of 3PL s as a percentage of total logistics costs still very low with only 10%. Source: The State of Logistics Outsourcing (17 th Annual Third-Party Logistics Study, October 2012)

8 January 17, in a fragmented market where large players gain market share Air Freight: market share Top 4 (% of total market, 2011) Air Freight: market share Top 4, last 10 years 7.2% 3.4% 3.2% 2.5% DHL DB Schenker K+N Panalpina 88.6% 83.7% 11.4% 16.3% Market share rest Market share Top 4 Ocean Freight: market share Top 4 (% of total market, 2011) Ocean Freight: market share Top 4, last 10 years 2.0% 1.7% 96.3% 94.4% Market share rest Market share Top 4 1.1% 0.8% K+N DHL DB Schenker Panalpina 3.7% 5.6% Very high market fragmentation despite consolidation in recent years Large forwarders with tendency to take share from smaller players and (ocean) carriers trend to continue Source: company reports, own estimates

9 January 17, The logistics market continues to grow, although the dynamics of growth vary strongly by geography Global 3PL (third-party logistics) market revenue (US$ billion) 3PL market revenue by geographic region (US$ billion) $700 $200 $191.1 CAGR % $600 $616.1 $180 $500 $400 $300 $417.1 $160 $140 $120 $100 $80 $143.6 $131.5 $94.3 $160.4 $159.9 $ % 4.0% Noram Europe Apac Latam Other 11.8% $200 $60 $40 $37.3 $ % $100 $20 $10.4 $ $ Recently improved data out of China and the U.S. Eurozone crisis still in the center of attention While 2012 was a very difficult year for most of Europe, other markets continued to grow Source: Armstrong & Associates, Panalpina

10 January 17, Customers needs for integrated solutions will continue to increase Low-cost country sourcing Regulatory compliance Outsourced manufacturing Cost reductions Increasing supply chain complexity Focus on core competencies Operational efficiencies Need for regional and local market expertise Expanding IT requirements 3PLs provide the know-how necessary to support increasingly complex supply chains involved in global trade. The worldwide network, asset-light model and core competence to offer end-to-end supply chain solutions are our key enablers to serve an increasingly demanding, global customer base. Source: Armstrong & Associates, Panalpina

11 January 17, Panalpina s strategy is well suited to accommodate this trend Supply Chain Services (SCS) Core service Supply Chain Optimization Network Optimization LLP, 4PL SC Perf. Management SC Visibility/ Event Mgmt. Cust. Desk/ Control Tower Order Management Buyers Consol Direct to Market Non-core service Standard Warehousing Air & Ocean Freight Customs Brokerage Overland End-to-end Supply Chain Solutions Logistics Value Added Services (VAS) Aftermarket / Reverse Log Spare Parts Pick & Pack E-Fulfillment Distribution Postponement VMI/I2M / CMI/LSF Kitting / Part# Change Light Assembly Core service offering consists of Air & Ocean Freight, complemented by Supply Chain Services and Logistics Value Added Services (In-house) Standard Warehousing and (stand-alone) Overland to support growth of core business Asset-light model (i.e. low capex, high returns on capital)

12 January 17, Group overview a solid position within the logistics industry Market-leading, global reach Regions contribution to Group GP Products contribution to Group GP CHF 6.5 bn ( 5.3 bn) revenues, CHF 1.5 bn ( 1.2 bn) gross profit (2011) Among top 5 globally in Air freight and Ocean freight Worldwide end-to-end supply chain solutions 100% 90% 80% 70% 60% 21.2% 20.9% 29.3% 30.3% 100% 90% 80% 70% 60% 23.7% 25.4% 29.7% 31.3% 500 own offices in over 80 countries, > employees 50% 40% 50% 40% Key competencies in nine industry verticals, industrial projects 30% 20% 49.5% 48.8% 30% 20% 46.6% 43.3% 10% 10% 0% 2011 YTD 2012 EMEA AMERICAS APAC 0% 2011 YTD 2012 Air Freight Ocean Freight Logistics Comprehensive global network, including broad-based presence in emerging markets Serving customers with tailored end-to-end solutions in various industries Product, industry and customer mix becoming more balanced as investments in Ocean Freight and Logistics start to pay off

13 2012 was a transition year for Panalpina January 17, Difficult and volatile macro environment with particular challenges in Air Freight Move to lean inventories and accelerated shift to other freight modes Weight per shipment decreasing, particularly in industries where Panalpina has a large footprint Situation in Eurozone affecting Europe-related trade lanes (approx. two thirds of Panalpina s Air Freight volumes) Completion of organizational structure Implementation of regional set-ups under the lead of Regional CEOs New CFO and CIO hired, new Head of Air Freight appointed Various non-recurring charges totalling CHF 101 million Anti-trust fines in EU and Switzerland: CHF 59 million Goodwill write-off Grieg Logistics: CHF 29 million Provisions related to accrued salaries for leaving employees: CHF 13 million

14 January 17, YTD business performance is unsatisfactory in Air Freight Gross profit in CHF million, January September 2012 Air Freight Ocean Freight Logistics 20.7% 20.7% 20.9% % 21.3% 20.5% 20.5% % 19.1% 19.2% 18.8% % 16.7% 16.9% % 39.5% % % 41.7% 37.2% % 100 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Air GP Air GP margin 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Ocean GP Ocean GP margin 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Logistics GP Logistics GP margin Air Freight: Δ yoy in % 1Q12 2Q12 3Q12 YTD 2012 Volumes -8% -3% -8% -6% GP/ton +1% -3% +4% +1% GP -6% -6% -4% -6% Ocean Freight: Δ yoy in % 1Q12 2Q12 3Q12 YTD 2012 Volumes +7% +7% +5% +6% GP/TEU -5% -5% +6% -1% GP +2% +2% +11% +5% Logistics: Δ yoy in % 1Q12 2Q12 3Q12 YTD 2012 GP 0% 1% +23% +8% Air Freight volumes impacted by high exposure to cyclical industries and trend towards smaller shipment sizes Ocean Freight with new quarterly and YTD volume record thanks to market share gains Profitability improvement initiatives in Warehousing & Distr. resulting in new record GP margin in Logistics Gross profit of the Group up 7% yoy in Q3 (excl. FX: -2%)

15 and on the cost side, resulting in EBITDA pressure Underlying EBITDA* in CHF million, January September 2012 January 17, % (Excl. FX: -56%) -40% (Excl. FX: -43%) 14.9% 14.5% 15.2% 14.9% 12.9% % 9.2% % % 99 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 YTD 2011 YTD 2012 Underlying EBITDA Underlying EBITDA/GP margin Underlying EBITDA Underlying EBITDA/GP margin EBITDA decline vs. prior year period due to weak Air Freight and higher cost base Cost reduction program resulting in decrease of personnel expenses as of the fourth quarter Continued focus on cost containment measures * EBITDA in Q adjusted for extraordinary provisions of CHF 59.2 million, EBITDA in Q adjusted for extraordinary provision of CHF 12.7 million

16 Business performance YTD 2012 situation analysis January 17, Pressure on volume and gross profit in Air Freight as a result of: high exposure to cyclical industries, concentrated customer base trend towards smaller shipment sizes overcapacity situation in the market compromising contribution from own-controlled network Sizeable business expansion in Ocean Freight and Logistics despite slowing market growth Gross profit per container impacted by hefty rate increases earlier in the year Rise in cost base not aligned with development of gross profit due to: Investments in Ocean Freight and Logistics not yet compensated by corresponding increase of business Implementation of regional set-up not yet cost-neutral Investments in sales structures not yielding planned increase of business

17 January 17, Business performance YTD 2012 planned main measures to counteract Adapted sales strategy from IV-led sales to trade lane sales: Focus on growth of strategic trade lanes (Transatlantic, Transpacific, Asia-Europe, Intra-Asia) Partial conversion of IV and general sales into trade lane sales Increase growth of medium-sized customer accounts to broaden customer base in Air Freight Process managed by Regions Review and optimization of own-controlled structure to increase contribution and reduce costs Further drive growth of Logistics business Strict cost management (expected cost savings of CHF 6-8 million in Q4 vs. Q3, additional savings targeted, e.g. cost neutrality from regional set-ups) Introduction of 3-months rolling forecast to align cost base faster to top-line developments Leverage efficiencies of regional structure

18 January 17, Selective investments in business platform will continue, additional costs expected to be largely offset by cost savings elsewhere SAP TM: One global, integrated system with workflows and centralized rate and tariff engine Pilots completed in 2012, roll-out in progress. Driving standardization, improving customer service. Opex increase of approx. CHF 15 million in 2013 entailed by roll-out is expected to be compensated by corresponding cost reductions elsewhere. Amortization charge related to capitalized costs of project is expected at approx. CHF 5 million in 2013 and will rise to approx. CHF 10 million in following years. Logistics: Ramp-up of W&D facilities during H : increase of existing business, new business in existing facilities Organization: investments largely complete selective additions to be compensated by corresponding headcount reductions elsewhere Roll-out of SAP TM will lead to increase in IT costs and capex in Further increase in W&D business planned

19 January 17, Outlook: After two years of shrinking volumes, global air freight traffic is expected to grow moderately in 2013 YoY (%): FTK 5% 4% -4% -10% 21% -0.5% -2.3% ATK 5% 5% 2% -8% 9% 5% 1% Seabury expects the air cargo market in 2012 to shrink by 2.3%. Only 1.4% global growth are expected for 2013, driven by continued soft European exports and imports. Capacity growing faster than demand since Source: Seabury Global Trade Forecast (November 2012). Data in chart on left-hand side from IATA (2012 data from Seabury), data in right-hand side chart are Seabury estimates.

20 January 17, Strong regional differences in air freight volume growth rates Only Intra-Asia and Latin America are expected to show (moderate) growth in Flows from Asia-Pacific are expected to show highest absolute growth in Smaller emerging markets to continue to outperform in exports and imports; some countries in Southeast Asia, South Asia, Middle East, Latin America and Middle East to do particularly well. Source: Seabury Global Trade Forecast (November 2012)

21 January 17, Ocean freight: capacity continues to grow faster than demand The markets continue to be perception driven the recent substantial orders of many shipping lines for TEU vessels, or even the next generation of TEU vessels are impacting today's market and pricing behavior already. In the last 15 months over two million TEU have been ordered and the TEU fleet is now growing at over 20% per year. Source: Alphaliner (November 2012)

22 January 17, Many yet unexploited internal drivers of growth and profitability Drivers of growth: Air and Ocean Freight: leverage global network by focusing on growth of strategic trade lanes Logistics: basics fixed in 2012, introduction of new value-added services, Logistics (competence) centers More balanced product, industry and customer mix as investments in Ocean Freight and Logistics start to pay off Drivers of profitability: Strict cost management (profitability improvement program, faster alignment to top-line developments, review/optimization of own-controlled network Improvements of productivity (workflow-based processes as by-product from SAP TM implementation, rate standardization platform, E-File, EDI connectivity to customers and carriers) Centralization of certain administrative tasks in Shared Service Centers Sales incentivization (harmonization of SIP s)

23 January 17, Disclaimer Investing in the shares of Panalpina World Transport Holding Ltd involves risks. Prospective investors are strongly requested to consult their investment advisors and tax advisors prior to investing in shares of Panalpina World Transport Holding Ltd. This document contains forward-looking statements which involve risks and uncertainties. These statements may be identified by such words as may, plans, expects, believes and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions. Various factors could cause actual future results, performance or events to differ materially from those described in these statements. No obligation is assumed to update any forward-looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material information concerning the Panalpina Group. None of Panalpina World Transport Holding Ltd or their respective affiliates shall have any liability whatsoever for any loss whatsoever arising from any use of this document, or its content, or otherwise arising in connection with this document. This document does not constitute, or form part of, an offer to sell or a solicitation of an offer to purchase any shares and neither it nor any part of it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. This information does neither constitute an offer to buy shares of Panalpina World Transport Holding Ltd nor a prospectus within the meaning of the applicable Swiss law.

24 January 17, Panalpina Group Appendix

25 Income statement Figures in CHF million Q Q January 17, Variance % Variance % YTD 2012 YTD 2011 CHF Excl. FX CHF Excl. FX Net forwarding revenue 1' ' % 0.4% 4' ' % -0.1% Forwarding expenses (1'341.9) (1'214.8) (3'822.0) (3'751.4) Gross profit % -2.5% 1' ' % -1.4% in % of net forwarding revenue 22.0% 22.7% 22.5% 22.7% Total operating expenses (361.1) (301.9) 19.6% 11.0% (1'079.7) (936.8) 15.3% 13.6% EBITDA % -77.8% % -87.4% in % of gross profit 4.8% 15.2% 2.4% 14.9% Operating result (EBIT) % -96.3% (5.1) % % in % of gross profit 1.8% 12.6% -0.5% 12.3% Financial result (0.2) (3.9) 0.5 (5.2) Earnings before taxes (EBT) (4.6) Income tax expenses (2.6) (9.1) (14.5) (31.6) % of EBT 38.7% 22.3% % 24.3% Consolidated profit (19.0) 98.7 in % of gross profit 1.1% 8.9% -1.7% 9.0% * ** Non-recurring items (12.7) - (71.9) - underlying EBITDA % -56.1% % -43.1% in % of gross profit 8.1% 15.2% 8.9% 14.9% underlying EBIT % -70.1% % -54.6% in % of gross profit 5.2% 12.6% 6.0% 12.3% GP growth driven by favorable development of Logistics and Ocean Freight, hit by disappointing Air Freight Operating expenses inflated by CHF 12.7 million provision related to accrued salaries for leaving employees Quarterly cost savings of CHF 6-8 million to take effect as of the fourth quarter * Operating expenses in Q1 include (non tax-deductible) extraordinary provisions of CHF 59.2 million and a (tax-deductible) CHF 12.7 million provision in Q3. ** The underlying tax rate (i.e. excluding non tax-deductible extraordinary provisions) YTD 2012 was 26.4%. *

26 January 17, Balance sheet Figures in CHF million 30-Sep Dec-11 Variance CHF % Cash and cash equivalents, other current financial assets % Trade receivables, unbilled forwarding services 1' ' % Other current assets % Property, plant and equipment % Intangible assets % Other non-current assets % Total assets 2' ' % Short-term borrowings % Trade payables, accrued cost of services % Other current liabilities % Long-term borrowings % Other long-term liabilities % Total liabilities 1' ' % Share capital % Reserves, treasury shares % Non-controlling interests % Total equity % Total liabilities and equity 2' ' % Net cash (debt) % Asset intensity * 5.8% 5.3% * Calculated as tangible fixed assets / total assets

27 Cash flow Figures in CHF million January 17, Q Q YTD 2012 YTD 2011 Cash flow before changes in working capital (10.4) Changes in working capital (8.5) 14.4 (48.2) 20.1 Cash from operations (18.9) 79.2 (21.2) Interest and income taxes paid (13.3) (6.8) (29.3) (31.3) Net cash from operating activities (32.2) 72.5 (50.5) Net cash from investing activities (25.4) (31.7) 26.9 (226.6) Free cash flow (FCF) (57.6) 40.8 (23.7) (86.4) FCF adj. for payment of EU antitrust fine (1.6) (86.4) * Net cash used in financing activities (45.7) (1.9) (96.5) (4.2) Effect of exchange rate changes (6.9) Cash and cash equivalents at beginning of period Net increase (decrease) in cash and cash equivalents (101.0) 46.8 (116.6) (97.5) Cash and cash equivalents at end of period * Q includes payment of ordinary dividend of CHF 47 million; Q includes share capital paid back to shareholders in the amount of CHF 45 million.