Company Reports

Kuehne + Nagel is the second-largest third-party logistics provider globally, with an estimated 5% share of a highly fragmented market. As a freight forwarder, KN contracts with airlines and ocean carriers for cargo space and then fills that capacity with customers' freight. KN’s strong suit lies in sea freight, where it is the largest operator globally and where its margins are the highest across the four divisions in the group. The company has indicated its willingness to reduce its reliance on the sea freight division by expanding the other businesses in the group, which we believe will strengthen the client offering and ultimately KN's network. Restructuring of the overland and contract logistics businesses has resulted in improved margins and increasing EBIT contributions. We believe there is further room for improvement in these businesses.

Results were a mixed bag for narrow-moat Kuehne+Nagel. After a decline in revenue in the first quarter, revenue rose 1% in the second quarter, driven by disruptions in the Red Sea and a recovery in demand for air freight. On a negative note, earnings did not grow in line with revenue, falling 25% year over year, highlighting the downside of the operating leverage inherent in the business. We reiterate our CHF 220 fair value estimate and see shares as overvalued currently.

It was a mixed start to the year for narrow-moat Kuehne+Nagel. The revenue decline in 2023 spilled into 2024, with a drop of 18% in the first quarter, leading to a reduction in earnings of 40%. On a more positive note, management was upbeat about demand trends and highlighted the material costs taken out of the business over the period. We reiterate our CHF 220 fair value estimate and see shares as overvalued currently.

Narrow-moat logistics firm Kuehne+Nagel rounded off a tumultuous 2023 with fourth-quarter numbers showing no end in sight to the malaise in global shipping. Revenue for the year fell by a whopping 40% year over year, while EBIT fell by half. We reiterate our CHF 220 fair value estimate and see the shares as overvalued currently.

Kuehne + Nagel is the second-largest third-party logistics provider globally, with an estimated 5% share of a highly fragmented market. As a freight forwarder, KN contracts with airlines and ocean carriers for cargo space and then fills that capacity with customers' freight. KN’s strong suit lies in sea freight, where it is the largest operator globally and where its margins are the highest across the four divisions in the group. The company has indicated its willingness to reduce its reliance on the sea freight division by expanding the other businesses in the group, which we believe will strengthen the client offering and ultimately KN's network. Restructuring of the overland and contract logistics businesses has resulted in improved margins and increasing EBIT contributions. We believe there is further room for improvement in these businesses.

Soon after DSV released its results on Oct. 24, narrow-moat third-party logistics company Kuehne+Nagel reported a similarly stark third-quarter update. Revenue fell by almost 50% year over year, with EBIT declines coming in a touch worse. With no end in sight to the malaise, management’s commentary was focused on cost controls for the final quarter of 2023. We reiterate our CHF 220 fair value estimate and see the shares as moderately overvalued currently.

With Kuehne+Nagel and DSV, two giants of the logistics industry, reporting on the same day we get an excellent insight into the current state of the global shipping market. It’s telling when the two companies report EBIT down year over year between one third and one half and entitle the announcements a “very good result” and “solid financial performance.” Relative to their respective fair value estimates, we believe the shares of both are currently overvalued.

Kuehne + Nagel is the second-largest third-party logistics provider, or 3PL, globally, with an estimated 5% share of a highly fragmented market. As a freight forwarder, KN contracts with airlines and ocean carriers for cargo space and then fills that capacity with customers' freight. KN’s strong suit lies in sea freight, where it is the largest operator globally and where its margins are the highest across the four divisions in the group. The company has indicated its willingness to reduce its reliance on the sea freight division by expanding the other businesses in the group, which we believe will strengthen the client offering and ultimately KN's network. Restructuring of the overland and contract logistics businesses has resulted in improved margins and increasing EBIT contributions. We believe there is further room for improvement in these businesses.

Kuehne + Nagel is the second-largest third-party logistics provider, or 3PL, globally, with an estimated 5% share of a highly fragmented market. As a freight forwarder, KN contracts with airlines and ocean carriers for cargo space and then fills that capacity with customers' freight. KN’s strong suit lies in sea freight, where it is the largest operator globally and where its margins are the highest across the four divisions in the group. The company has indicated its willingness to reduce its reliance on the sea freight division by expanding the other businesses in the group, which we believe will strengthen the client offering and ultimately KN's network. Restructuring of the overland and contract logistics businesses has resulted in improved margins and increasing EBIT contributions. We believe there is further room for improvement in these businesses.

Renowned investor Howard Marks often describes markets as a pendulum that swings from one extreme to the other, rarely spending much time in the center. For narrow-moat Kuehne + Nagel, this phrase couldn’t be truer of market conditions. From the best year ever in 2022, we’ve now entered a period described by Kuehne’s CEO as “extremely challenging.” Revenue is down 37% year over year, and EBIT is down 45%. While we may tweak our estimates on the back of this update, we reiterate our CHF 196 fair value estimate. We believe the shares are currently overvalued.

Narrow-moat Kuehne+Nagel delivered a bumper set of full-year results, with revenue almost doubling precoronavirus levels, and net profits more than tripling. These results came with the warning that the volumes and profit levels in 2022 will not be repeated in 2023, something the investor community is well aware of, given the share price has fallen by almost 30% from its peak during the pandemic. While we will update our forecasts on the back of these results, we do not expect this to change our fundamental view on the stock. Relative to our CHF 196 fair value estimate, we see shares as fully valued at these levels.

For the first time since picking up coverage of the sector almost six years ago, third-party logistics, or 3PL, giants DSV and Kuehne + Nagel have reported quarterly earnings on the exact same day, giving us a unique snapshot into the current state of global shipping markets. The long and the short of it is that despite investors’ fears for 2022, it has been a bumper year. Better than that, Kuehne + Nagel have gone so far as to say that it has been its “best ever nine-month results”. Although container freight rates peaked this time last year, they have remained elevated relative to historical levels, allowing 3PL firms to generate sky-high profits this year.

Narrow-moat Kuehne+Nagel has continued to deliver exceptional results in the first half of the year, in the face of a slow reversal of trends that set off the supply chain crisis, as well as recessionary concerns. Net turnover was up 55%, while earnings more than doubled over the period. Although we may tweak our near-term forecasts on the back of this additional data point, we don’t expect this to have a material impact on our view of the stock. At current levels we believe the shares are overvalued.

Like Maersk, on April 26 narrow-moat Kuehne+Nagel reported strong numbers, with supply chain issues in global shipping markets spilling over into 2022 and demand for transport services still strong. Revenue was up almost 70% year over year and earnings up more than 160% in the first quarter. While we still expect some normalisation in the second half of the year, a view supported by commentary from Maersk on April 26, we still expect a strong year from Kuehne+Nagel. Despite this, we view the current share price as overvalued relative to our CHF 196 fair value estimate.

Kuehne + Nagel is the second-largest third-party logistics provider, or 3PL, globally, with an estimated 5% share of a highly fragmented market. As a freight forwarder, KN contracts with airlines and ocean carriers for cargo space and then fills that capacity with customers' freight. KN’s strong suit lies in sea freight, where it is the largest operator globally and where its margins are the highest across the four divisions in the group. The company has indicated its willingness to reduce its reliance on the sea freight division by expanding the other businesses in the group, which we believe will strengthen the client offering and ultimately KN's network. Restructuring of the overland and contract logistics businesses has resulted in improved margins and increasing EBIT contributions. We believe there is further room for improvement in these businesses.

Narrow-moat Kuehne+Nagel delivered a stonking performance in 2021, with revenue up more than 60% year over year, and earnings almost threefold what the company made the prior year. This comes on the back of tight capacity in shipping markets, which have caused freight rates to spike, and allowed third-party logistics firms such as Kuehne to leverage its strong position in sea freight to capture higher fees. With 2022 shaping up to be another hugely profitable year for the shipping and logistics industry, we expect to upgrade our near-term forecasts for Kuehne, but do not expect this to change our stance on the stock. Despite the attractive prospects over the coming period, we believe the shares are overvalued relative to our CHF 160 fair value estimate.

Narrow-moat Kuehne + Nagel International delivered a strong third-quarter update, with revenue up 70% year over year and EBITDA up more than 60%. This comes on the back of tight capacity in shipping markets, which have caused freight rates to spike, and allowed third-party logistics, or 3PL, firms such as Kuehne + Nagel to leverage its strong position in sea freight to capture higher fees. With the share price having more than doubled since the beginning of the coronavirus pandemic, we view the Oct. 20 share price decline as simply the market adjusting in a very minor way to the possibility that the current situation in shipping markets may not continue forever. We reiterate our CHF 160 fair value estimate and view the shares as overvalued.

Kuehne + Nagel, or KN, is the second-largest third-party logistics provider, or 3PL, globally, with an estimated 5% share of a highly fragmented market. As a freight forwarder, KN contracts with airlines and ocean carriers for cargo space and then fills that capacity with customers' freight. KN’s strong suit lies in sea freight, where it is the largest operator globally and where its margins are the highest across the four divisions in the group. The company has indicated its willingness to reduce its reliance on the sea freight division by expanding the other businesses in the group, which we believe will strengthen the client offering and ultimately KN's network. Restructuring of the overland and contract logistics businesses has resulted in improved margins and increasing EBIT contributions. We believe there is further room for improvement in these businesses.

Narrow-moat logistics giant Kuehne + Nagel delivered an impressive set of first-half results. Revenue increased 35% year over year for the half year, and up 48% for the quarter, albeit against a particularly weak comparative period. EBIT doubled year over year as the company benefited from “uniquely high consumer demand combined with supply chain uncertainty.” We expect to update our near-term forecasts on the back of this additional data point, but believe any resulting changes to our CHF 160 fair value estimate will not alter our stance on the stock. With the share price having doubled in just the last 12 months, we do not see any value in it at this time.

Narrow-moat Kuehne+Nagel delivered a strong start to 2021 with revenue rising almost 23% year over year. While this was partly a result of easy comparatives, with the global coronavirus causing maximum disruption in the first quarter last year, it was also a result of unprecedented demand in specific segments as shippers attempt desperately to relieve bottlenecks. Although we expect to revisit our near-term forecasts on the back of this data point, we do not expect this to have a material effect on our CHF 160 fair value estimate, which is currently looking rather anaemic next to the prevailing share price. Ultimately however, we believe investors have become overly excited about the resilience of the 3PLs over the last year and are extrapolating unsustainable levels of financial performance. Kuehne+Nagel's share price has shot up by close to 140% since March 2020, and almost 50% in the last two months alone, reflective we believe, of this frenzied investor gravitation to high-performing stocks.