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Introduction & Market Context
Kuehne + Nagel International AG (SIX:KNIN) presented its first quarter 2025 results on April 24, highlighting strong performance across its Sea and Air Logistics segments despite ongoing global trade uncertainties. The Swiss logistics giant reported a 7% year-over-year increase in EBIT to CHF 402 million, demonstrating resilience in a challenging market environment.
The company’s performance comes amid persistent global supply chain disruptions and geopolitical tensions that have reshaped trade flows. Despite these challenges, Kuehne + Nagel managed to expand market share in key segments while improving its cash flow position significantly compared to the previous year.
Quarterly Performance Highlights
Kuehne + Nagel reported solid growth across key financial metrics for Q1 2025. Net turnover increased by 15% year-over-year to CHF 6.3 billion, with organic growth contributing 11%. Gross profit rose by 8% to CHF 2.2 billion, while earnings per share improved by 6% to CHF 2.45.
One of the most significant improvements came in cash flow management, with free cash flow reaching CHF 173 million compared to negative CHF 85 million in the same period last year. The company achieved a free cash conversion rate of 55%, substantially better than historical first-quarter averages.
As shown in the following summary of key financial metrics:
Segment Analysis
Sea Logistics
The Sea Logistics division delivered strong results, with gross profit increasing by 15% year-over-year to CHF 577 million and EBIT rising by 7% to CHF 210 million. Volume growth reached 3% headline and 6% underlying, outperforming market growth. The segment benefited from the first-time consolidation of the IMC acquisition, which proved earnings accretive.
Despite the positive growth, the conversion rate declined slightly from 39% to 36% year-over-year, reflecting some pressure on margins. However, both gross profit per TEU and EBIT per TEU improved compared to the previous year.
The following chart illustrates the performance trends in Sea Logistics:
Air Logistics
Air Logistics emerged as the standout performer among all segments, with EBIT surging 23% year-over-year to CHF 116 million and gross profit increasing by 12% to CHF 439 million. The division achieved 5% volume growth despite significant headwinds from the automotive sector, driven primarily by the Apex subsidiary and perishables business.
The conversion rate improved from 24% to 26%, demonstrating enhanced operational efficiency. Market share growth and broad-based yield improvements contributed to the strong performance.
The following chart shows the key metrics for Air Logistics:
Road Logistics
Road Logistics faced significant challenges, with EBIT declining by 37% year-over-year to CHF 19 million, despite a modest 2% increase in gross profit to CHF 331 million. The segment’s conversion rate dropped from 9% to 6%, reflecting persistent market headwinds.
Management attributed the underperformance to yield pressure from low demand in the network and weakness in selected industries and geographies. However, the company noted strong development in customs clearance activities, which partially offset the negative trends.
Contract Logistics
Contract Logistics delivered stable results in line with expectations, with gross profit increasing by 4% year-over-year to CHF 890 million and EBIT rising by 4% to CHF 57 million. The conversion rate remained steady at 6%.
The company reported market share expansion in healthcare and e-commerce sectors, contributing to continued profitable growth. Net turnover for the segment increased by 3% to CHF 1,178 million.
Strategic Initiatives & Outlook
Kuehne + Nagel outlined its strategic priorities under the "Roadmap 2026" framework, focusing on four key areas: enhancing customer experience, developing a digital ecosystem, advancing ESG initiatives, and capitalizing on market potential through both organic growth and acquisitions.
The digital ecosystem strategy emphasizes cloud technology to improve data utilization and time-to-market, while automation efforts aim to make operations more efficient and scalable. On the ESG front, the company is developing solutions to help customers reduce carbon emissions.
The following slide details the company’s strategic roadmap:
For 2025, Kuehne + Nagel maintained its EBIT guidance range of CHF 1,500 to 1,750 million, compared to CHF 1,671 million achieved in 2024. However, management noted greater uncertainty related to global economic development. The company expects a gradual decline in gross profit yields for air and sea logistics as supply chain disruptions potentially ease.
Financial Analysis
Kuehne + Nagel demonstrated significant improvement in working capital management and cash flow generation. The company’s free cash flow conversion rate of 55% in Q1 2025 represents a substantial improvement from -32% in Q1 2024, driven by a CHF 217 million improvement in working capital outflows.
The cash conversion analysis shows that Q1 2025 performance was stronger than historical first-quarter averages:
The company’s income statement reveals organic net earnings growth of approximately 5%, with no significant currency effects. The first-time consolidation of IMC positively impacted results:
Working capital intensity increased slightly to 5.1% as of March 31, 2025, compared to 4.4% at the end of 2024. The DSO-DPO spread narrowed slightly to 3.3 days from 3.7 days at the end of 2024, indicating relatively stable working capital efficiency:
Key Takeaways
Kuehne + Nagel’s Q1 2025 results demonstrate the company’s ability to navigate a complex global trade environment while delivering growth. Management highlighted five key takeaways from the quarter: volume growth above market, yield expansion in Sea and Air Logistics, positioning for market share gains, heightened agility amid global trade uncertainties, and continued focus on customer proximity.
The company’s strong performance in Sea and Air Logistics offset challenges in Road Logistics, while significant improvements in cash flow management underscore the effectiveness of its financial strategy. As global trade patterns continue to evolve, Kuehne + Nagel appears well-positioned to capitalize on emerging opportunities through its strategic focus on digital transformation, customer experience enhancement, and targeted acquisitions.
Full presentation:
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