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Kuehne & Nagel Investor Day Slides

Kuehne & Nagel Investor Day Slides

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Sections

  • Capital Markets Day 2011 Introduction and Strategy
  • Contents
  • Chairman‘s statement
  • Global trade and global GDP
  • Different scenarios for the global economy
  • Main strategic focus in volatile economic environment
  • Strategy update -conclusion
  • A successful strategy requires high stability in leadership
  • Capital Markets Day 2011 Execution of Strategy
  • Special welcome to our guests:
  • Strategy “Go for Growth”-update
  • Profitable Growth
  • (+19% YTD*)
  • Strategy “Go for Growth”–deliveries
  • Strategy “Go for Growth”–deliveries…(cont’d)
  • How to manage business in a volatile environment
  • Outlook Full Year 2011
  • Capital Markets Day 2011 Financial Update
  • Highlights first-half year2011
  • Income statement first-half year2011
  • Development main exchange rates vs. CHF
  • Controlling tool kit: “Go for Growth”–Return on Investment
  • Example controlling tool kit: trade lane analysis
  • Example controlling tool kit: sales investment
  • Continuous commitment to protect profitability and secure cash
  • Capital Markets Day 2011 Seafreight Logistics
  • Global container market
  • Market growth by trade lanes
  • Market rate development
  • Growth strategy: “Go for Growth”
  • Growth initiatives –status update
  • Productivity initiatives
  • KNLogin: a recognised solution
  • KNLogin: a recognised solution (cont‘d)
  • Capital Markets Day 2011 Airfreight Logistics
  • Global Airfreight market
  • Kuehne + Nagel Top 3 worldwide -challenging No
  • Kuehne + Nagel outperforming the market since 2001
  • Airfreight growth initiatives
  • Growth initiatives –status update (cont’d)
  • Case study: e-Commercesolution
  • Capital Markets Day 2011 Kuehne + Nagel Germany
  • Success story from different perspectives
  • Overview -history
  • Attractive logistics market
  • Key contributor to the Group‘s growth and performance
  • Improved market penetration
  • Cross-selling
  • Seafreight and Airfreight –market positions
  • Road & Rail and Contract Logistics –market positions
  • Our key success factors
  • Capital Markets Day 2011 Road & Rail Logistics| Contract Logistics
  • The Kuehne + Nagel business units in comparison
  • Preconditions for global integrated, end-to-end logistics
  • Global RoadLogistics-market and trends
  • Global RoadLogistics-market and trends (cont’d)
  • Kuehne + Nagel RoadLogistics: turnover growth
  • Kuehne + Nagel RoadLogistics: EBITA margins
  • Recent Developments Kuehne + Nagel RoadLogistics
  • Outlook Kuehne + Nagel RoadLogistics
  • Global RailLogistics-market and trends
  • Global Contract Logistics –market and trends
  • Contract Logistics–developmentof idle space
  • Contract Logistics–Kuehne + Nagel platform
  • Contract Logistics -growththrough systematic cross- regional selling
  • Strategic goals –globalIT standards
  • Global Lead Logistics -market and trends
  • Value proposition Lead Logistics –overview key benefits for customers
  • Why integrated end-to-end logistics, instead of Sea & Air only?
  • Disclaimer

Capital Markets Day 2011 Introduction and Strategy

Karl Gernandt Chairman of the Board of Directors, Kuehne + Nagel International AG September 14, 2011

Contents

Strategy update and economic environment

Kuehne + Nagel | Capital Markets Day 2011

September 14, 2011

p. 2

Chairman‘s statement

Kuehne + Nagel International AG: Change of chairmanship

Performance of the Kuehne + Nagel Group first-half year 2011

More challenging economic environment expected

Kuehne + Nagel | Capital Markets Day 2011

September 14, 2011

p. 3

Global trade and global GDP

% 12 Global Trade 8 4 Global GDP 0 -4 -8 -12

2001

2006

2011

2012

Kuehne + Nagel | Capital Markets Day 2011

September 14, 2011

p. 4

Stagnation +/-0% in developed markets. 5 . Recession negative growth in developed markets and significant drop in emerging markets negative growth (10%) Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p. Growth approx.Different scenarios for the global economy Global GDP Global Trade Logistics Industry Sea: Air: CL/R&R: 6% 5% GDP I. 3% approx. slower growth in emerging markets slower growth 0% III. 7% II.

2011 p.Main strategic focus in volatile economic environment Business development Further increase of sales force to secure and expand market share Cost control Reduction of operational costs in line with volume development Cash control Prudent asset management to protect cash Mergers & Acquisitions opportunities Strict travel and employee expenses policy Tight working capital management High focus on reduction of administration costs Restrictive capex Kuehne + Nagel | Capital Markets Day 2011 September 14. 6 .

conclusion Scenario-adjusted management Preparation of different action plans to protect profitability and cash flow Track record of effective management for all possible scenarios High transparency and control as well as proven tools Flexibility to temporarily adjust timing and investment level if needed Clear commitment on execution and delivery of “Go for Growth” plan Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p.Strategy update . 7 .

A successful strategy requires high stability in leadership
Karl Gernandt
Chairman

Headquarters

Reinhard Lange
CEO

Management Board

e.g. Tim Scharwath SW Europe NW Europe e.g. Yngve Ruud … … Norway …
September 14, 2011 p. 8

Africa Regional Management

AsiaPacific Middle East

Central Europe North America … …

Eastern Europe

South America … …

National Management

… …

… …

Kuehne + Nagel | Capital Markets Day 2011

Capital Markets Day 2011 Execution of Strategy
Reinhard Lange Chief Executive Officer, Kuehne + Nagel International AG September 14, 2011

Special welcome to our guests:
Michael Dreher VP and Head of Business Solution Logistics in Global Operations adidas Group Dr. Ian Shellard Global Physical Logistics Director Rolls-Royce

Kuehne + Nagel | Capital Markets Day 2011

September 14, 2011

p. 10

Contents
Update “Go for Growth” Current performance Execution of strategy in a more volatile environment

Kuehne + Nagel | Capital Markets Day 2011

September 14, 2011

p. 11

Brazil and Colombia Development of European Road & Rail network Enhancement of the network Profitable Growth (+19% YTD*) * 06/2011 YTD profit after tax. forex Kuehne + Nagel | Capital Markets Day 2011 September 14.Strategy “Go for Growth” .update Development of industry-specific solutions Integrated services through IT leadership Continuation of global expansion Focus on China. excl. 12 . India. 2011 p.

Sales pipeline increased significantly .Acquisition of Cooltainer / New Zealand .Development Rail Network benefiting all business units .Strategy “Go for Growth” – deliveries Development of industry-specific solutions Recruitment of product specialists Integrated Services and IT Leadership Perishables Logistics: Continuation of global Expansion Colombia Pharma Logistics . India.Dedicated infrastructure in progress Development of European Road & . 13 . 2011 p.Acquisition of Translago & Mastertransport / Colombia and Ecuador .Acquisition of van de Put / Netherlands Focus on China. Brazil and On track Development of the network Kuehne + Nagel | Capital Markets Day 2011 September 14.

Brazil and .KNLogin available for all products Colombia .Continuous development of integrated applications based on latest technology Development of European Road & Rail Network Development of the network Kuehne + Nagel | Capital Markets Day 2011 September 14.Strategy “Go for Growth” – deliveries (cont’d) Development of industry specific solutions Integrated services through IT leadership On track .) Focus on China. 14 .Continuous investment in IT Continuation of global Expansion (> CHF 200 million p. 2011 p. India.a.

Acquisition Rail Network of Grupo Eichenberg China Development of the network . 15 . 2011 p. India.Launch of Road Logistics activities Kuehne + Nagel | Capital Markets Day 2011 September 14. Brazil and Colombia Brazil Development of European Road & .Strategy “Go for Growth” – deliveries (cont’d) Development of industry specific solutions Integrated Services and IT Leadership On track Continuation of global expansion Focus on China.

India.Further investments needed Continuation of global Expansion Rail Focus on China.Development of intermodal products Colombia Development of European Road & Rail network Extension of the network In progress Kuehne + Nagel | Capital Markets Day 2011 September 14. Brazil and . 2011 p.Strategy “Go for Growth” – deliveries…(cont’d) Development of industry specific solutions European Road Logistics network Integrated Services and IT Leadership . 16 .European hub & spoke system in progress .Acquisition of RH Freight / UK .

2011 p. 17 .Current performance First-half year 2011 Kuehne + Nagel Seafreight Airfreight Road & Rail Contract Logistics + 12% + 18% + 21% + 5% Market + 6% + 1 to 2% + 4% + 3% Main competitors 0 to +5% (2) to +9% +9 to +21% +2 to +7% Kuehne + Nagel has continued to gain market share Kuehne + Nagel | Capital Markets Day 2011 September 14.

Recession Kuehne + Nagel | Capital Markets Day 2011 September 14.How to manage business in a volatile environment I. 2011 p. Growth Direct manpower Administration IT Sales Capex M&A “Go for Growth” Contract Logistics Selective growth with multinational customers and profitability improvement II. 18 . Stagnation III.

Outlook Full Year 2011 Sea Logistics KN H1 2011 Market 6% 12% Air Logistics 18% < 2% Road & Rail Logistics 21% 4% Contract Logistics 5% 3% KN FY 2011 Market 10-12% 5% 10-12% 0% 15-17% 3% 5% 2% Difficult to reliably forecast global trade for 2nd half 2011 Kuehne + Nagel | Capital Markets Day 2011 September 14. 19 . 2011 p.

Capital Markets Day 2011 Financial Update Gerard van Kesteren Chief Financial Officer. Kuehne + Nagel International AG September 14. 2011 .

Contents Highlights first-half year 2011 Exchange rate development / impact Financial controlling in a more volatile environment Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p. 21 .

Highlights first-half year 2011 Material negative forex impact of 16% Stable Sea.2% working capital intensity ROCE at all time high 56% Effective tax rate 21% sustainable Kuehne + Nagel | Capital Markets Day 2011 September 14.0% in June 2011 Stable 3. 2011 p. 22 . impacted by negative forex Road & Rail Logistics: consolidation of RH Freight (UK) as of April 2011 Reduction of idle space in Contract Logistics from 9.and Airfreight margins per unit.2% last year to 6.

8% (2'800) 572 5.7%) Kuehne + Nagel | Capital Markets Day 2011 September 14.2% (55) (15.1% 96 7.5% (1'366) (418) 348 (70) (13.0% 94 7.6% 451 4.6% 454 4.4% (56) (15.6%) Net earnings for the period 281 356 75 (44) (15.1% 11'152 3'372 30.4% EBIT EBIT margin 357 3.9%) (14.1%) 14. 2011 p.2% 1'303 411 31.4%) EBT EBT margin 358 3.7%) Total expenses EBITDA EBITDA margin (2'486) 475 4.1% (314) 97 7.0% (14. 23 .Income statement first-half year 2011 CHF million 2010 Actual 2011 w ith 2010 fx rates Variance Forex Impact in CHF million as % Invoiced turnover Gross profit Gross profit margin 9'849 2'961 30.

* EBIT and FX impact 600 Impact on net profit: approx.EUR / CHF: 1.35 500 EBIT in CHF m ∆ 55 451 400 396 357 300 H1 2010 H1 2011 H1 2011 adj. 14% based on: .20 .USD / CHF: 0. 24 . 10% GBP Translation only 10'500 9'849 9'786 9'000 Full year 2011 estimate forex: H1 2010 H1 2011 EBIT Development and FX Impact H1 2011 adj. CHF Turnover and FX impact Turnover Development and FX Impact 12'000 Comments Currency mix (Turnover): ∆ 1‘366 11'152 Turnover in CHF m 50% EUR.GBP / CHF: 1.85 . 2011 p.Development main exchange rates vs.* * Adjusted figures calculated with 2010 exchange rates Kuehne + Nagel | Capital Markets Day 2011 September 14. 25% USD.

000 profit centers Monthly reporting on 5th working day of the following month for all profit center managers – globally Full visibility due to single.Controlling tool kit: “Go for Growth” – Return on Investment Key elements and benefits of Kuehne + Nagel’s tool kit Strong sales effort and efficiency improvement for growth Outset: 250 legal entities in over 100 countries managed via 6. standardised reporting and controlling platform Financial and operational controlling Great flexibility of system. Data available: per business unit (BU) per geography per trade lane and product Strong operational capabilities and knowhow per Industry vertical per customer (across BUs) per salesperson Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p. 25 .

stable margin per unit) Kuehne + Nagel | Capital Markets Day 2011 September 14. 26 .Example controlling tool kit: trade lane analysis Example per trade lane and product Investment: Trade lane know-how (24 specialists hired) Product know-how (44 specialists hired) Controlling: Return on investment volume growth and gross profit Result: visibility of growth and margins Result: Profitable growth (volume growth. 2011 p.

TO/GP/volume contribution per customer turnover/ gross profit/ volume Tools: Performance by sales executive Result: Contributing double-digit organic growth in Sea & Air Kuehne + Nagel | Capital Markets Day 2011 September 14.Controlling KPIs . 27 . 2011 p.Example controlling tool kit: sales investment Example Investment: per salesperson > CHF 300 million sales cost (+11% 2011/10) 300 additional sales executives first-half year 2011 Controlling: Return on investment growth .

2011 p. region. 28 . trade lane and customer – take action wherever needed Controlling Dedicated taskforce to identify and monitor profit improvement initiatives Kuehne + Nagel | Capital Markets Day 2011 September 14. daily monitoring AR exposure.Continuous commitment to protect profitability and secure cash “Cash is King” Kuehne + Nagel approx. CHF 700 million cash Working capital Dedicated taskforce in corporate finance. DSO and DPO Differentiate actions Full transparency by vertical.

Capital Markets Day 2011 Seafreight Logistics Otto Schacht Executive Vice President. 2011 . Kuehne + Nagel International AG September 14.

30 . 2011 p.Contents Global market update Market position Growth initiatives Case study – KNLogin Kuehne + Nagel | Capital Markets Day 2011 September 14.

31 .Global container market Container trade growth in first-half year 2011 5-6%. 2011 p. slower growth expected in second-half of 2011 Asia – US market volumes down June / July by 8% Rapid rise in ordering activities by carriers Supply is growing faster than demand Kuehne + Nagel | Capital Markets Day 2011 September 14.

Far East > Latin America Kuehne + Nagel | Capital Markets Day 2011 September 14.Far East > Europe .Market growth by trade lanes 30% 20% 10% Q2 08 Q2 09 0% Q2 10 Q2 11 -10% -20% -30% . 2011 p. 32 .Far East > North America .Intra Asia .Europe > North America .

Europe Far East > North America Europe > North America Asia .Market rate development USD per FEU June 2008 June 2009 June 2010 June 2011 Far East > Med Far East > N. 2011 p. 33 .ISC Far East > Latin America Kuehne + Nagel | Capital Markets Day 2011 September 14.

Growth strategy: “Go for Growth” 2009 2014 FCL TEU 2.2 mn cbm >2. 2011 p.3mn TEU >1. 34 .0 mn TEU 32% TEU 44 % Kuehne + Nagel | Capital Markets Day 2011 September 14.0 mn LCL cbm 1.5 mn Industry-specific solutions Outside Europe TEU 0.5 mn TEU >5.

driven by high spot demand Kuehne + Nagel | Capital Markets Day 2011 September 14.Growth initiatives – status update Transpacific (EB) development Specialists being hired to meet 2014 target YTD market +4%. (June / July 2011 market -8%. 35 . Kuehne + Nagel +11%) Kuehne + Nagel reached Top 3 position. challenging No 1 Carrier dominated market Intra–Asia development Team in place Kuehne + Nagel No 1 of international forwarders in a highly fragmented market Carrier dominated market. Kuehne + Nagel +13%. 2011 p.

36 . Perishables and Forest Products) Most of the specialists in place Further acquisitions under review Sea Transport Management / STM (carrier management) Volume development within target Kuehne + Nagel | Capital Markets Day 2011 September 14.Growth initiatives – status update (cont’d) Industry-specific business solutions (Drinks. 2011 p.

37 . 2011 p.Growth initiatives – status update (cont’d) Additional focus LCL Global team in place Small.and medium-sized customers Trade lane focus Kuehne + Nagel | Capital Markets Day 2011 September 14.

target 25% 3 4 5 New operating software SeaLog / start roll-out in 2013 Paperless operation Shared service centers September 14. 38 Kuehne + Nagel | Capital Markets Day 2011 . EDI processes 2 Customer e-Booking Today 5% .Productivity initiatives Goal: Increase productivity by 5% every year Main focus 1 Further carrier integration Today 80% EDI bookings / add. 2011 p.

2011 39 .KNLogin: a recognised solution Detailed information KNLogin Customer Production Production planning Sales forecast marketing Research and development Public relations Kuehne + Nagel Planning Optimising Monitoring Controlling Reporting Execution Local fulfillment Vendor I Vendor II Carrier I Carrier II Carrier III NVO Forwarder Airline I Airline II Airline III Information Contract Kuehne + Nagel | Capital Markets Day 2011 September 14.

40 . 2011 p.KNLogin: a recognised solution (cont‘d) Kuehne + Nagel | Capital Markets Day 2011 September 14.

2011 . Kuehne + Nagel International AG September 14.Capital Markets Day 2011 Airfreight Logistics Tim Scharwath Executive Vice President.

2011 p.Personal background – Tim Scharwath 1992 joined Kuehne + Nagel Germany 1992 to 2004 various positions in Germany in Sales and General Management 2004 to 2007 Senior Vice President Airfreight Logistics Central Europe 2007 to 2009 National Manager Netherlands 2009 to 2011 Regional Manager North West Europe Since September 1. 2011: Executive Vice President Airfreight. Management Board member of Kuehne + Nagel International AG Kuehne + Nagel | Capital Markets Day 2011 September 14. 42 .

43 . 2011 p.Contents Global market update Market position Growth initiatives Case study: e-Commerce solution Kuehne + Nagel | Capital Markets Day 2011 September 14.

44 . 2011 p.Global Airfreight market Slowing growth (last 3 months declining volumes) Increasing overcapacity Market rate volatility steadily growing Airline profitability forecast 2011 halved to USD 4 billions (IATA 2010: USD 18 billions) Kuehne + Nagel | Capital Markets Day 2011 September 14.

Kuehne + Nagel Top 3 worldwide .00% DHL DB Schenker KN Panalpina CEVA Sinotrans Expeditors Source: Company reports and Kuehne + Nagel estimates Kuehne + Nagel | Capital Markets Day 2011 p.50% 1. 45 .00% 0.50% 3.challenging No 2 Market share 2010 based on turnover 4.50% 2.00% 1.50% 0.00% 3.00% 2.

0% 1.0% 20.0% 3.0% 1.0% ‐15.0% Kuehne + Nagel Market Share 5. 46 .0% ‐5.5% 0.0% 0.IATA based Global vs Kuehne + Nagel Growth Kuehne + Nagel outperforming the market since 2001 25.0% 2001 2002 2003 2004 Global Growth (IATA) 0.0% 2005 2006 2007 2008 2009 2010 2011E Kuehne + Nagel Growth Market Share (right axis) Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p.5% ‐10.0% 2.5% Global vs Kuehne + Nagel Growth % 15.0% 2.0% 10.

2011 p. challenge No 2 Volume increase of more than 50% (2009 to 2014) Growth initiatives 1 2 3 Transpacific development Intra-Asia development Business solutions: Perishables Logistics Pharma Logistics 4 Airfreight products: e-Commerce September 14. 47 Kuehne + Nagel | Capital Markets Day 2011 .Airfreight growth initiatives Goal: Maintain No 3 market position.

Growth initiatives – status update Transpacific Development team complete Delayed start-up Intra-Asia Sales team not yet completed Volume development delayed Pharma logistics Experienced pharma team in place Significantly improved sales pipeline Kuehne + Nagel | Capital Markets Day 2011 September 14. 48 . 2011 p.

Fully integrated Europe: acquisition (van de Put) – September 2011 .EU leading platform secured .Further acquisitions outside of Europe would make Kuehne + Nagel global market leader Kuehne + Nagel | Capital Markets Day 2011 September 14. 49 .000 t . 2011 p.Growth initiatives – status update (cont’d) Perishables South America: acquisition (Translago) – January 2011 .Kuehne + Nagel can now offer door-to-door services 2011 estimated 220.Leader in South America .

2011 p. 50 .and medium-sized customers Volume growth from customer segments currently not targeted Productivity improvement Focus on new generation of buyers of logistics services Kuehne + Nagel | Capital Markets Day 2011 September 14. booking & tracking solution Target: small.Case study: e-Commerce solution “Air Logistics Online” – easy-to-use quotation.

2011 .Capital Markets Day 2011 Kuehne + Nagel Germany Hans-Georg Brinkmann Regional Director Central Europe September 14.

2011 52 .Success story from different perspectives History & Culture People Processes & IT Economic Environment Customers Seafreight Airfreight Road & Rail Contract Logistics Market & Competition Kuehne + Nagel | Capital Markets Day 2011 September 14.

000 employees Back in … „Homebase“ Bremen Low staff turnover and strong focus on talent management EUR 4 billion turnover expected for 2011 Over 19.history “Homebase” – founded in 1890 > 100 locations Approx.Overview . 10. 2011 53 .000 customers Industry focus (amongst others): Automotive Technology & Aerospace Pharma Hafencity Hamburg Kuehne + Nagel | Capital Markets Day 2011 Strong growth – also driven by acquisitions September 14.

Belgium -4. Austria. Italy. low youth unemployment rate Specialised and well established logistics education Attractive logistics infrastructure Export is 1/3 of national output Main import / export partners: France. Netherlands.Attractive logistics market GDP (change in %) 3. UK.7 2006 2007 2008 2009 2010 2011 Foreign trade balance (EUR million) Kuehne + Nagel | Capital Markets Day 2011 September 14. Switzerland.0 Details Unemployment rate: 7%.0 3.4 2. 2011 54 . USA.6 1. China.7 3.

Key contributor to the Group‘s growth and performance Continuous growth (EBIT Index) … … driven by people (FTE) +47% 147 6. 2011 55 .717 100 Seafreight +28% 8.304 100 Seafreight Airfreight Road & Rail Airfreight CL Road & Rail CL Others 2006 2010 2011 (1-6) 2006 2010 2011 (1-6) Kuehne + Nagel | Capital Markets Day 2011 September 14.605 9.

2011 56 .900 2005 2006 2007 2008 2009 2010 2011 Kuehne + Nagel | Capital Markets Day 2011 10.000 15.500 16.Improved market penetration Number of customers +81% Top 5 customers (Turnover) +49% 19.000 14.000 18.000 16.500 2009 2010 2011 September 14.

2011 57 .Cross-selling Our target: “one stop shopping” Cross-selling as growth driver Industry-focus supports strong position Full 7% 31% 15% 30% Triple Acquisitions with strong cross-selling impact Global key account management in other regions supports Germany Double 29% 24% Single 33% 31% 2011 2010 Kuehne + Nagel | Capital Markets Day 2011 September 14.

e. Pharma.& outbound container flows Improvement of processes & workflows to increase productivity and quality Kuehne + Nagel | Capital Markets Day 2011 Growth opportunities & challenges Strong growth even in a mature market with a market share of 12% (Top 3 together: 38%) Focus on vertical markets.g.Seafreight and Airfreight – market positions Seafreight market position 1 2 3 4 5 1 Airfreight market position 2 3 4 5 Growth opportunities & challenges Strong market position in the important outbound east /west trade lanes Focus on forest products and dedicated automotive approach Centralised intermodal operations to optimise in. Automotive Increase of productivity by implementing paperless processes September 14. 2011 58 .

) in place Focus on “Operational Excellence” and customer satisfaction through best practices Balance between organic and non-organic growth Sound customer mix Efficiency improvements through campus concept September 14. e. Pharma Successful M&A integration Concentration on cross-selling Increasing productivity by implementation of unified IT-systems 1) Growth opportunities & challenges Experienced management in all areas (IT. 2011 59 Kuehne + Nagel estimates Kuehne + Nagel | Capital Markets Day 2011 ..Road & Rail and Contract Logistics – market positions Road & Rail market position1) 1 2 3 4 5 1 Contract Logistics market position1) 2 3 4 5 Growth opportunities & challenges Further development of European network Strong focus on product development in vertical markets.g. . Operations.. Implementation.

not managers Be proud Attract & retain Encourage young talents Driven by diversity Kuehne + Nagel | Capital Markets Day 2011 September 14.Our key success factors Market perspective People perspective Top market position Still hungry Thinking differently Entrepreneurs. 2011 60 .

2011 .Capital Markets Day 2011 Road & Rail Logistics | Contract Logistics Dirk Reich Executive Vice President. Kuehne + Nagel International AG September 14.

2011 p. 62 .Contents Introduction Road & Rail Logistics Contract Logistics Conclusion Kuehne + Nagel | Capital Markets Day 2011 September 14.

June YTD) Sea Logistics Air Logistics Contract Logistics* Road & Rail Logistics GP: 625 EBIT: 210 (54%) ROCE: > 100% GP: 396 EBIT: 121 (31%) ROCE: > 100% GP: 1’475 EBIT: 56 (15%) ROCE CL: 23% ROCE RE: 4% GP: 438 EBIT: (1) (0%) ROCE: n/a Why does Kuehne + Nagel invest outside Sea & Air? Kuehne + Nagel | Capital Markets Day 2011 * including Real Estate September 14.The Kuehne + Nagel business units in comparison (in CHF million. 2011 p. 63 .

Road & Rail (local scale) Direct operational control Quality assurance – “end to end” End-to-end capabilities Kuehne + Nagel | Capital Markets Day 2011 September 14.Preconditions for global integrated. end-to-end logistics Preconditions IT competence – “end to end” Process competence – “end to end” Global standards – “end to end” Cost competitiveness of Contract Logistics. 64 . 2011 p.

2011 p.Global Road Logistics .market and trends Geographic split of global market in CHF billion Key trends Industry consolidation in Europe continues Europe 340 Americas 340 Total Market: CHF 900 bn* Financial crisis leads to pressure in Southern Europe South America and Asia: strong growth to continue AsiaPac 180 * Source: 2010 estimates by Kuehne + Nagel Kuehne + Nagel | Capital Markets Day 2011 September 14. 65 .

market and trends (cont’d) Segment split of global market in CHF billion Special Transport 200 Key trends CEP providers gain market share due to e-Commerce and trend to smaller.Global Road Logistics . high frequency shipments FTL / LTL segment shows start of industry consolidation Bulk 200 FTL/LTL 180 Groupage margins under pressure from CEP and FTL / LTL Kuehne + Nagel to focus on Specialised Networks. FTL / LTL and Groupage CEP 150 Groupage 100 * Source: 2010 estimates by Kuehne + Nagel Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p. 66 .

Kuehne + Nagel Road Logistics: turnover growth Specialised Networks European Domestic European International FTL / LTL Groupage 5% 0 . 67 . 2011 p.5% 5 .10% 20% 10% Americas / Asia >20% Focus on international transportation in Europe Kuehne + Nagel | Capital Markets Day 2011 September 14.

2% <0% >2% 3 . 2011 p.Kuehne + Nagel Road Logistics: EBITA margins Specialised Networks European Domestic European International FTL / LTL Groupage 0 .3% High margin potential in Specialised Networks and FTL / LTL Kuehne + Nagel | Capital Markets Day 2011 September 14.2% Americas / Asia 0 . 68 .4% 0 .

Sea and Contract Logistics’ customers European Transportation Control Center go-live Luxembourg Organic growth with key accounts Groupage Acquisition of RH Freight (international groupage) Improved results in France Stable IDS alliance and positive results in Germany Challenges in Greece Development of European hub & spoke system Kuehne + Nagel | Capital Markets Day 2011 September 14. 69 .Recent Developments Kuehne + Nagel Road Logistics Specialised Networks Organic growth of high tech network Organic growth of pharma network FTL / LTL Acquisition of Grupo Eichenberg / Brazil Start of FTL / LTL traffics in China organically and for Air. 2011 p.

2011 p. small acquisitions Investments in high growth regions / countries to continue despite start-up losses Margins to become positive through tight cost control.Outlook Kuehne + Nagel Road Logistics Growth to continue through combination of organic development and selected. scale and higher growth in FTL / LTL Kuehne + Nagel | Capital Markets Day 2011 September 14. 70 .

Global Rail Logistics . 71 .market and trends Geographic split of global market in CHF billion Key trends Sustainability and CO2-reduction as key driver for rail business CIS / Middle East 60 Shortage of equipment North America 80 Total Market: CHF 200 bn* Limitations of rail infrastructure Asia 40 Europe 20 Intermodal business becomes key growth area * Source: 2010 estimates by Kuehne + Nagel Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p.

2011 p. 72 .Outlook Rail Logistics Increased demand between Asia and Europe First Kuehne + Nagel test-train from Chongqing to Duisburg expected for end of 2011 Kuehne + Nagel | Capital Markets Day 2011 September 14.

Global Contract Logistics – market and trends Market size and share Market size EUR >200 bn globally Kuehne + Nagel market share approx.5% Market growth 2011: + 3% Market trends Multinational customers reduce number of suppliers due to increased demand for consistent. DHL loses market share Industry consolidation has lost momentum Kuehne + Nagel | Capital Markets Day 2011 September 14. global service offering “Lean” becomes prerequisite for success Margins stable on low level Wincanton has been broken-up. 2011 p. 73 . 1.

0% 12.10.0% 8.0% Ja n 6.0% 2. 2011 p.0% 2008 Kuehne + Nagel | Capital Markets Day 2011 2009 12.9% .0% 4. 74 Fe '08 b '0 M 8 ar '0 Ap 8 r' 0 M 8 ay '0 Ju 8 n '0 Ju 8 l' Au 08 g ' Se 08 p '0 O 8 ct '0 N 8 ov ' D 08 ec '0 Ja 8 n Fe '09 b '0 M 9 ar '0 Ap 9 r' M 09 ay ' Ju 09 n '0 Ju 9 l' Au 09 g ' Se 09 p '0 O 9 ct '0 N 9 ov D '09 ec '0 Ja 9 n Fe '10 b '1 M 0 ar '1 Ap 0 r' M 10 ay ' Ju 10 n '1 Ju 0 l' Au 10 g ' Se 10 p '1 O 0 ct '1 N 0 ov D '10 ec '1 Ja 0 n Fe '11 b '1 M 1 ar '1 Ap 1 r' M 11 ay Ju '11 ne '1 1 5.0% 6.2% 0. targeting all time low 2011 September 14.5% Contract Logistics – development of idle space Target: 5% 2010 Significant reduction of idle space.0% 14.

2011 p. best-in-class logistics worldwide Management Project Mandate Definition Follow Up Project Kick Off Project Closure Data Collection Stabilization Analysis Implementation Solution Development Innovative. integrated solutions Solution Solution Presentation Verification and Selection Management Project Mandate Definition Follow Up Project Kick Off Kuehne + Nagel Production System Project Closure Data Collection Stabilization Analysis Implementation Solution Development Solution Solution Presentation Verification and Selection Standardised process design Global WMS and standardised interfacing Kuehne + Nagel’s global footprint. 75 . local expertise in over 100 countries and a worldwide warehousing network Kuehne + Nagel | Capital Markets Day 2011 September 14.Contract Logistics – Kuehne + Nagel platform Reliable.

76 .Contract Logistics .growth through systematic crossregional selling Key Focus Increase number of countries with contract logistics activities # countries 55 Focus on multinational customers is key to success Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p.

Strategic goals – global IT standards Example: CIEL WMS / TMS CIEL WMS / TMS Release Countries Customers 2001 #1 1 1 3/2008 # 28 42 450 9/2009 # 34 >50 >600 9/2010 # 37 >50 >700 9/2011 # 39 >50 >750 Kuehne + Nagel: The only company with a standard WMS / TMS in >50 countries Kuehne + Nagel | Capital Markets Day 2011 September 14. 77 . 2011 p.

Outlook Contract Logistics Focus on margin improvements Growth and investments focused on multinational customers and integrated logistics Focus on dedicated and larger logistics campuses at strategic locations Target ROCE above 30% in short-term 35% ROCE CL (in %) 25% 15% 5% 2008 2010 06/2011 YTD 2012 Kuehne + Nagel | Capital Markets Day 2011 September 14. 78 . 2011 p.

2011 p.market and trends Complex and globalised logistics chains cover 10 – 20% of the logistics market Customers tend to outsource logistics management to avoid huge investments / learning curve challenges Industry-specific know-how is key to manage global chains across all service modes and geographies A limited number of global logistics players can deliver upon the integrated and industry dedicated requirements Kuehne + Nagel will further invest into Lead Logistics Kuehne + Nagel | Capital Markets Day 2011 September 14.Global Lead Logistics . 79 .

Value proposition Lead Logistics – overview key benefits for customers One managed end-to-end solution integrating all transport and service modes Visibility and comprehensive information Performance management and cost control Single point of contact Integrated global IT solution. Road & Rail and Contract Logistics Kuehne + Nagel | Capital Markets Day 2011 September 14. 2011 p. including centralised billing Synergies from shared control center environment Generation of additional value and growth for Sea. 80 . Air.

Why integrated end-to-end logistics. 2011 p. 81 . instead of Sea & Air only? Customer proposition to cover increasingly complex and global logistics needs Reducing customers total supply chain cost (end-to-end) End-to-end quality assurance Cross-selling across all business fields Cross-selling across all regions Several years of evidence Long standing and tight relationship with customers (IT) Kuehne + Nagel requires each segment to be profitable on it‘s own Integrated logistics leads to better margins in Sea & Air Customer Value Growth Profitability Kuehne + Nagel | Capital Markets Day 2011 September 14.

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