German logistics giant Dachser announced that it was to make a major push into the global forwarding industry. Management of the privately owned company has revealed that it intends to create a further 1,600 new jobs by 2011, opening 72 new offices and generating more than e1bn.
The first part of the plan to increase its penetration of the global forwarding market will occur over the next five years. During this period the company aims to more than double the sales of its air and sea activities which presently stand at e431m. This will include increasing its Asia Pacific business from e85m to approximately e300m; its European business to e600m; and its Americas business from just e21m to e120m.
It was also reported that German private investor Cornelius Geber and his backers, Blackstone, a US private equity group, have abandoned their plans to acquire TNT. Apparently the decision was made following the premature release of news of their intentions leading to a sharp increase in TNT’s share price. The price was also driven up by the intervention of hedge funds which consequently made the group too expensive for the consortium.
Despite the news that Geber is no longer in the market for TNT, there is a strong likelihood that other buyers may still be stalking the company. Although the measures undertaken by management, such as disposing of the unprofitable French operations, have been well received by shareholders, they have also increased its attractiveness to other players, both private equity and trade.
Re-focusing operations
The announcement will come as a relief to TNT’s management which over the past few months has started to re-focus its operations on its mail, express and freight forwarding networks. The results, released earlier this week, show that the networks part of the business is by far the most profitable and this fact has been used to justify the company’s decision to dispose of a large part of its logistics division. In addition to a change of strategy, management also announced last year that it would be increasing shareholder value through a share buy back scheme.
Meanwhile TNT’s rival Deutsche Post World Net announced that it had agreed to dispose of Marken, the specialist courier company that it acquired as part of the acquisition of Exel in December 2005. An agreement was reached with 3i, a UK based provider of venture capital and private equity, together with the existing management team which will remain with the business.
The sale of Marken indicates an interesting change of emphasis by the German express, mail and logistics giant. Whereas for many years the company focused on its aggressive acquisition programme in terms of strategy as well as in the messages it was sending to the market, recent communications have been more conservative in tone. DPWN stressed in its press briefing that it has consistently been divesting units and activities that do not have as many direct synergies with the wider business within its global network as part of its ongoing business review process. Since 2004, it revealed that it has divested more than 30 holdings that are not tied to the company’s core business through ‘active portfolio management’.
Swiss based logistics provider Kuehne + Nagel announced a big increase in its revenues in 2005. The global logistics group increased turnover by 21.5 per cent to e8,949m in 2005. At e289m, the operational result (EBITA) exceeded the previous year by 19.0 per cent.
In Contract Logistics, Kuehne + Nagel boosted its organic growth while maintaining stable margins. Increased business volume and productivity as well as strong operational performance in North America contributed to a considerably improved result. Turnover grew by 14 per cent, whilst EBITA increased by 19.4 per cent, resulting in an enhanced operating margin of 4.2 per cent. The agreement reached in October 2005 to acquire ACR Logistics will take effect as of January 1, 2006.
French logistics provider Geodis also released its final results for 2005. The group realised operating profit of e85.4m, amounting to 2.4 per cent of revenue, increasing around 22 per cent over the previous year on a like for like basis. International goods flows, its operations in Eastern Europe, and the increased business generated in France during the second half of 2005 enabled Geodis to post revenue growth of 6.7 per cent.
Despite the strong performance overall, the company reported a 2005 operating loss of e20.8m in Italy. This was roughly in line with management’s announcements in June with an improving sales outlook and lower operating losses posted in the second half of the year.
Management commented that it remained confident in its capability to pursue profitable organic growth, notably driven by the growth of its international logistics business activities, despite the uncertainties currently impacting the European economy.
