AT THE HEART OF THE ROAD TRANSPORT INDUSTRY.

Call our Sales Team on 0208 912 2120

Fresh challenges for Salvesen

22nd December 2005
Page 20
Page 20, 22nd December 2005 — Fresh challenges for Salvesen
Close
Noticed an error?
If you've noticed an error in this article please click here to report it so we can fix it.

Which of the following most accurately describes the problem?

We look at Christian Salvesen's efforts to climb back up the profit ladder, and the problems and opportunities that 2006 will bring.

Chris Morgan, Automotive & Logistics Datamonitor

Christian Salvesen s nterim results for the period to the end of September show a slight improvemeni. despite 'competitive market conditions". Pre-tax profits rose 5% to 28.1m, while turnover increased from 2399m to 2402m, although this was attributable to favourable exchange rates. Progress was also made on its net debt, which dropped to 2109m.

350 300 250 200 150

loo

50

However, behind the headline figures was a mixed bag of operational and geographical performance. Continental European transport operations have performed as expected, as strong turnover growth helped to offset the pressure on margins. This pressure was mainly caused by higher fuel costs in Spain and Portugal, which led to a national drivers' strike. Turnover in the French market rose by 9% on the back of new contract wins and expanding volumes.

The story in its domestic market has been different, though the UK transport business made an operating loss of 21.6m, with turnover down by over 3% to 275m. Moreover, net wins for the remainder of the year will be lower than normal in contract logistics due to rationalisation in the retail sector.

In an attempt to resolve these issues, Christian Salvesen has taken a significant step by creating a joint venture with APL Logistics, a leading freight-management company. This is a very good move strategically a growing number of customers are working increasingly closely with manufacturers in the Far East, and therefore it was imperative for Christian Salvesen to broaden its geographic scope.

Nevertheless, this does not hide the fact that there are still problems in its core markets. With the Deutsche Post-Exel merger approved and the recent announcement that TNT is to divest its logistics operations, the logistics industry landscape will change significantly over the next 12 months. As such, Christian Salvesen must put its house in order quickly, or else it could be left trailing behind its main rivals.


comments powered by Disqus