July 20 - Due to the continuing slowdown in the oil and gas business, Panalpina recognised a restructuring cost of CHF26 million (USD26.3 million) in the second quarter of 2016, leaving it with an adjusted consolidated profit of CHF47.9 million (USD48.4 m
The logistics provider posted a gross group profit of CHF736.3 million (USD744.7 million) in the first half of 2016, and an adjusted EBIT of CHF60.8 million (USD61.5 million) in light of the oil and gas related restructuring provision.
According to Panalpina's consolidated results, the restructuring plan is related to the "right-sizing of certain energy solution operations and sites", mainly in the USA and in some African countries, due to lower volumes. The rest of the restructuring provision relates to headcount reductions in Europe, Singapore and certain countries in Africa, said the company.
"During the second quarter it became evident that the oil and gas business will not bounce back any time soon. Therefore we decided to realign our capacities with the current volumes and not wait for the market to recover. We took the full restructuring costs in the second quarter instead of later," said Panalpina ceo Peter Ulber.
"The encouraging news is that the rest of the business continued to show considerable robustness against the backdrop of receding markets in air and ocean freight. The underlying profitability remained stable for the first half year."
Panalpina's airfreight volumes increased 8 percent in the first six months of 2016, while the gross profit per tonne decreased by 4 percent year-on-year, due in part to lower volumes in the oil and gas sector.
Significantly lower volumes in oil and gas related cargoes also affected the company's ocean freight results, with volumes decreasing by 9 percent year-on-year in the reporting period. A discontinued high-volume contract also contributed to the decline, said Panalpina.
Meanwhile, the company's logistics gross profit remained "virtually stable" at CHF198.9 million (USD201.3 million).
"We still consider the oil and gas industry as a strategic business and are confident that we have taken the right measures in a market that is slowly stabilising," stated Ulber.
"In all other industries, our business has shown good momentum and we expect this to continue throughout the year. Cost control remains a key priority as we continue to balance our business and product mix."