Positive AGM update
While there has been a degree of disruption due to COVID-19, this has been less than management expected and mostly offset at the margin level by the action taken on the cost base during Q1.Furthermore, the M&A pipeline is healthy and likely to grow further in the current climate.; and we are encouraged by the H2 bias to trading, the action taken on costs and only a modest reduction in margins.
In summary, the UK (2019: 42.1% of revenues), Italy and Spain were the worst affected regions in the period. However, this was not universal with e-commerce, temperature-controlled shipping (food and hygiene product distribution) and stationery (home office/schooling) all performing well.
The Group’s operations in the Baltic states and Central & Eastern Europe (“Baltics†and “CEEâ€, 57.9% of revenues) performed well, reflecting lower impact there of COVID-19. Freight Forwarding and Pall-Ex Romania fared particularly well, exceeding initial expectations.
Note also that the Freight Forwarding division is asset light, acting as a broker, and therefore does not have vehicles or drivers standing idle. Where shortages have occurred and prices risen, the Group has been able to pass those cost increases on to customers.
We maintain our view that the net cash, NAV of 21p/share and the resilient trading to date offer a high degree of comfort, underpinning the stock in the current environment.
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Kuehne & Nagel International is a holding company, engaged in providing logistics solutions. Co.'s business units comprised of: Seafreight, Airfreight, Overland, and Contract logistics. Co. operates on a worldwide basis in the following geographical areas: Europe, Americas, Asia-Pacific and Middle East, Central Asia and Africa. Within its Seafreight, Airfreight and Overland business units, Co. is engaged in purchasing transportation services from direct (asset-based) carriers and selling a combination of those services to its customers. Co. also develops solutions for the construction, renovation and operation of hotel chains and casinos all over the world.
Eddie Stobart is a logistics and supply chain organization in the UK. From its headquarters in Warrington, operating 2,200 vehicles, 3,800 trailers and 24 distribution centres throughout the UK and Europe. Co. operates its business across the following core sectors: E-Commerce - covering online retailers and omni-channel retailers; Manufacturing, Industrial & Bulk - includes movement of raw materials and components used in manufacturing processes; Consumer includes the movement of manufactured products; and Retail covers the retail supply chain, operating from either a retailer's supplier or a retailer's own distribution centers, from where goods are transported to a retailer's outlets.
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