GFC hits Ceva Logistics result

Ceva Logistics reports near 30 percent decline in profit and 13.2 percent drop in revenue as a result of a marked decline in demand for global logistics management services

March 8, 2010

Ceva Logistics has reported a near 30 percent decline in profit and 13.2 percent drop in revenue as a result of a marked decline in demand for global logistics management services.

The London-based group says revenues dipped to €5.5 billion (2008: €6.3 billion) while earnings before interest, tax, depreciation, amortisation and ‘specific items’ fell to €233 million (2008: €326 million).

CEO John Pattullo attributes the poor performance to the global logistics markets falling "precipitously" in November 2008 before staging "some recovery" later in 2009.

Overall, the market declined by about 12 percent year-on-year, he estimates.

"This has had an obvious impact on the business with reduced volumes. In the last quarter we continued to recover volumes and revenues; however, as freight carriers removed capacity and rates increased, we saw price increases that we were unable to pass through immediately to customers. We expect to recover these margins in 2010," he says.

Volumes in one of Ceva’s "key" sectors, automotive, continued to "rally" through the year including the fourth quarter.

"We remain focused on our strategy of increasing our share in other sectors to broaden our markets served and are pleased to report increases in our technology and industrial businesses, with particular growth in the fourth quarter among technology customers," Pattullo says.

"In 2009, our new business wins continued at an enhanced rate and are up 10 percent compared to 2008.

"Our ongoing program of cross-selling wins generated revenue of over €550 million in 2009."

At the same time Ceva has focused on cost cutting.

Pattullo says the company set a "challenging target" of removing more than €100 million of cost from the business in 2009 by implementing savings at all levels. It had exceeded this by 25 percent (€125 million) at the year end.

"Those actions have helped compensate the volume reduction during the year and we expect many of those costs reductions to be sustainable," he adds.

"Even in a difficult trading period we have delivered positive cash flow from the business. In particular, our management and ongoing focus on working capital reductions over the course of the year have continued to improve and we ended the year at €1 million (2008: €126 million).

"In a challenging year, we delivered solid and progressive results and, overall, we believe that CEVA responded well to a different and demanding trading environment, and is well positioned for the future."

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