Kuehne + Nagel International AG ZfU-Seminar mit Prof. Robert S. Kaplan October 27, 2011 in Opfikon-Glattbrugg Gerard van Kesteren CFO
Agenda What about Kuehne + Nagel 2-9 Strategy Go-for-Growth / Possible Scenarios 10-15 Controlling Tool Kit 16-21 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 2
Global Logistics Network Over 60 000 employees 900 locations in more than 100 countries Ownership of the global network Non-asset based ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 3
Success Factors for a Leading Global Position Human Resources attractive remuneration programme / Employee Share Purchase and Option Plan Information Technology standardised IT systems / resulting in business intelligence Finance globally standardised system Ownership of the Global Network / 900 locations Seafreight No. 1 Airfreight No. 3 Road & Rail Logistics No. 6 Contract Logistics No. 3 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 4
Sector Positioning Global Scop pe high low average 6 7 8 9 1 2 3 4 5?? Kuehne + Nagel and its most important competitors count on global, integrated Logistics services. historical estimated 1 2 3 4 5 6 7 8 9 narrow medium wide Service Portfolio ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 5
Highlights 9-Months 2011 Strong volume growth above market in all business units: Kuehne+Nagel Market - Seafreight 11.4% 5% - Airfreight 14.5% 0% - Road&Rail 19.4% 3% - Contract Logistics 7.9% 2% Material negative forex impact of 14.5% Lower Seafreight margins per unit due to low rate environment Airfreight margin per unit stable, despite negativ forex impact Road & Rail Logistics: Acquisition Eichenberg Group, Brazil Reduction of idle space in Contract Logistics from 8.4% last year to 5.1% September 2011 Stable 3.6% working capital intensity ROCE sustainable at 54% Effective tax rate 21% sustainable ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 6
Income Statement 9-Months CHF million 2010 Actual 2011 w ith 2010 fx rates Variance Forex Impact 2011 in CHF million As % Actual Variance Invoiced turnover 15'178 16'707 1'529 (2'109) (13.9%) 14'598 (580) Gross profit 4'453 5'016 563 (636) (14.3%) 4'380 (73) Gross profit margin 29.3% 30.0% 36.8% 30.0% Total expenses (3'707) (4'184) (477) 532 14.4% (3'652) 55 EBITDA 746 832 86 (104) (13.9%) 728 (18) EBITDA margin 4.9% 5.0% 5.6% 5.0% EBIT 571 654 83 (82) (14.4%) 572 1 EBIT margin 3.8% 3.9% 5.4% 3.9% EBT 572 661 89 (82) (14.3%) 579 7 EBT margin 3.8% 4.0% 5.8% 4.0% Net earnings for the period 449 519 70 (65) (14.5%) 454 5 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 7
Competitive Environment 1 st Semester 2011 Company Sea Air Road & Rail Market 6.0% <2.0% 4.0% Kuehne + Nagel 11.8% 17.7% 11.3% DHL 0.2% 2.4% n.a. DB Schenker 4.6% (0.6%) 20.7% Panalpina 2.5% (2.2%) n.a. DSV 5.1% 9.2% 12.0% ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 8
Share Performance 160 140 120 100 Gerard van Kesteren CFO 80 60 40 20 0 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 9
Agenda What about Kuehne + Nagel 2-9 Strategy Go-for-Growth / Possible Scenarios 10-15 Controlling Tool Kit 16-21 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 10
Strategy Go for Growth - Update Development of industry specific solutions Integrated Services through IT Leadership Continuation of global Expansion Focus on China, India, Brazil and Colombia Profitable Growth (+16% YTD*) Development of European Road & Rail Network Development of the network * 09/2011 YTD profit after tax, excl. forex ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 11
Execution of Strategy Business development in the next five years 2009 2014 Revenue CHF 17 bn CHF 30/40 bn Staff FTE 55 000 FTE 80-90 000 Seafreight TEU 2.5 mn TEU >5.0 mn TOP 1 Airfreight Tons 0.8 mn Tons 1.3 mn Road & Rail CHF 2.5 bn 100% turnover increase Contract Logistics CHF 4.3 bn 50% turnover increase ZfU-Seminar mit Prof. Kaplan - 27.10.11 TOP 3 TOP 3 * TOP 3 * in Europe Slide 12
Different Scenarios for the Global Economy Global GDP Global Trade Logistics Industry I. Growth approx. 3% approx. 7% Sea: 6% Air: 5% CL/R&R: GDP II. Stagnation +/-0% in developed markets; slower growth in emerging markets slower growth 0% III. Recession Negative growth in developed markets and significant drop in emerging markets negative growth (10%) ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 13
How to manage Business in a volatile Environment Direct Manpower Administration I. Growth II. Stagnation III. Recession IT Sales Capex M&A Go for Growth Contract Logistics Focus on multinational customers and profitability improvement ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 14
Impact 10% Volume Reduction K+N in CHF million YTD September 2011 10% volume reduction "left" Invoiced Turnover 14'598 (1'460) 13'138 Gross Profit 4'398 (438) 3'960 Manpower (2'505) - (2'505) Other operations (1'147) - (1'147) EBITDA 728 (438) 290 EBIT 572 (438) 134 PAT 457 (346) 111 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 15
Agenda What about Kuehne + Nagel 2-9 Strategy Go-for-Growth / Possible Scenarios 10-15 Controlling Tool Kit 16-21 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 16
Controlling Tool Kit: Go for Growth Return on Investment Key Elements and Benefits of Kuehne + Nagel s Tool Kit Strong Sales Effort and Efficiency Improvement for Growth Financial and Operational Controlling Outset: 250 legal entities in over 100 countries managed via 6 000 profit centers Monthly reporting on 5th working day of the following month for all profit center managers globally Full visibility due to single, standardised reporting and controlling platform Great flexibility of system. Data available: per Business Unit (BU) per Geography per Trade-Lane and Product Strong Operational Capabilities and Know-How per Industry Vertical per Customer (across BUs) per Salesperson ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 17
Example Controlling Tool Kit: Trade Lane Analysis Example per Trade-Lane and Product Investment: Trade lane know-how (24 specialists hired) Product know-how (44 specialists hired) Controlling: Return on investment volume growth/gp Tools: Vol/GP/GP per unit report by trade lane (air/sea: +120.000 port to port: country by country 12.000) Result: Profitable growth (volume growth, stable margin per unit) ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 18
Example Controlling Tool Kit: Sales Investment Example per Salesperson Investment: + CHF 300 million Sales cost (+11% 2011/10) 300 additional sales executives 1 st half 2011 (+ 300 targeted for 2 nd half) Controlling: Return on investment TO/GP/Volume growth Tools: Performance by sales executive Activities (KPI s) TO/GP/volume contribution per customer Result: Contributing double digit organic growth in Air and Sea ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 19
Changes implemented Detailed Budget (time horizon 15 months!) cancelled Rolling Forecast concept introduced based on 3 months Monthly review calls with Regional Management Financial function clear Nr. 2 ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 20
Q&A ZfU-Seminar mit Prof. Kaplan - 27.10.11 Slide 21
Thank you for your attention.
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