Summary
Revenue up 5.1% to ?1,844 million in the Third Quarter, led by strong growth in Oceanfreight and the Automotive sector
EBITDA1 of ?70 million, primarily as a result of weaknesses in our CL segment, particularly in Southern Europe
Solid progress in business development with an estimated ?532 million new wins secured in the quarter
Company announces comprehensive plan to reduce costs and improve contract performance with a net benefit of approximately ?100 million.
Marvin O. Schlanger, CEO, said: “Weak economic conditions continued to weigh on customer sentiment in the Third Quarter. With no real prospect of a significant and sustained market recovery in the short term, we continue to focus our efforts on cost control to maintain our efficiency and on new business development to secure our future revenues and ensure we are ready to take advantage of any improvements in global markets.”
“Our Business Development activity has accelerated, resulting in our best quarter for contract wins since 2009. This is an important endorsement from the market of our unique operational capabilities and excellent service and value proposition.”
He added: “This was a disappointing quarter in terms of our profit performance. We are addressing the decline in profitability with a comprehensive plan to reduce overhead costs and improve contract performance. We are targeting a net benefit of approximately ?100 million from these actions.”
Three quarters ending 30 September 2012
Key Financials (? millions)
2011 2012 Change
Revenue 5,154 5,364 4.1%
Adjusted EBITDA2 238 206 (13.4%)
1All references to EBITDA are to Adjusted EBITDA. 2Excludes the impact of specific items which are significant non-recurring items such as restructuring and certain legal expenses.
In the first nine months revenue for the Group increased 4.1% to ?5,364 million (2011: ?5,154 million). Freight Management (FM) revenues increased 5.0%, while Contract Logistics (CL) grew 3.3%. EBITDA declined 13.4% to ?206 million, mostly driven by weak performance in our CL business.
In the Third Quarter, revenue for the Group increased 5.1% to ?1,844 million (2011: ?1,755 million). FM revenues increased 6.4%, while CL grew 3.3%. Progress in FM was largely due to strong growth in our Oceanfreight business, particularly out of Asia Pacific and the Americas where we saw customers shifting significant volumes from Air to Ocean. Despite this structural shift to Oceanfreight, net revenue margins in Airfreight remained strong.
EBITDA in the Third Quarter declined to ?70 million, primarily as a result of continuing weakness in our CL performance, particularly in Southern Europe, Middle East and Africa (SEMEA). In the FM business, net revenue increases did not fully compensate for upward cost pressure.
Similarly the additional working capital requirements associated with increased Oceanfreight volumes and normal-course seasonality were significant elements of the ?13 million increase in Group working capital from the Second Quarter. Cash generated from operations during the Third Quarter amounted to ?22 million compared to ?40 million last year.
The Group is addressing the decline in profitability with a three-pronged cost reduction plan focused on SG&A costs, FM direct costs and fixing underperforming contracts. The reduction in FM direct costs is in part enabled by our successful execution of Program UNO, which helped to standardize processes across FM operations worldwide. CEVA’s strong commitment to operations excellence and customer focus will remain unchanged.
As previously announced, John Pattullo retired as CEO on 12 October, and has been replaced by Marvin O. Schlanger. Pattullo continues to serve on CEVA’s Board of Directors.
For more information contact:
Archiraya Wangkiat
Spark Communications
Tel: 02-653-2717-9
Email: [email protected]