CEVA demonstrates resilience
CEVA Holdings LLC
Results for the First Half ended 30 June 2016
- CEVA’s evolution continues against difficult market conditions, illustrated by above-market volume growth in Air and Ocean freight and resuming growth in Contract Logistics
- Adjusted EBITDA of $118 million, up 1.6% in constant currency
- Freight Management EBITDA¹ of $30 million reflecting a YoY increase of 32.0% in constant currency. Air freight volumes up 6.6% in Q2, YoY; Ocean freight volumes up 2.2% in Q2, YoY
- Contract Logistics EBITDA¹ of $69 million in first half. Q2 experienced best revenue growth since beginning of 2015, however temporary margin reduction related to project start-ups in certain geographies.
Hoofddorp, the Netherlands, 5 August, 2016 – CEVA Holdings LLC (“CEVA” or the “Company”), one of the world’s leading asset-light based supply chain management companies, today reported results for the First Half 2016 ended 30 June, 2016.
Key Financials ($ millions)
|H1 2016||H1 2015(a)||% Change||% Change Constant FX|
|Adjusted EBITDA¹ (b)||118||125||(5.6)||1.6|
¹ Segmental EBITDA and Revenue numbers excludes the impact of specific items
(a) Key Financials table above exclude the impact of disposals representing $45 million for revenue and $1 million on EBITDA in H1 2015.
(b) Adjusted EBITDA includes the proportional contribution of the Anji-CEVA joint venture ($19m) and excludes the impact of specific items which are significant non-recurring items such as restructuring and certain legal expenses.
“CEVA’s forward momentum continues in line with our strategy. Our half-year performance demonstrated stable net revenue in the first half driven by above-market growth in air and ocean freight and resumed growth in Contract Logistics,” said Xavier Urbain, CEO. “This is good progress, however we won’t stop here. As the logical next step in CEVA’s evolution, a global operational excellence program was started in April to take the organization to the next level by simplifying and applying consistent standards and best practices across the organization with the goal of better serving our customers. This program will also help us to deliver additional productivity improvements for all our business lines.”
“We have successfully introduced a new structure for Freight Management in the US and have an experienced management team in place. With the roll-out of our One Freight System in North America, CEVA can now provide customer shipment oversight through a single, global freight management system. Our ongoing investment in field sales teams led to a number of significant new business wins and renewals in the Automotive, Consumer & Retail and Technology sectors.”
Freight Management EBITDA was $30 million, reflecting a YoY increase of 32.0% in constant currency. In the first half, improvements in direct expenses were achieved while net revenue margins remained stable. In Q2, and in the face of a flat market, Air volumes increased 6.6% and Ocean volume up 2.2% YoY despite an ongoing reduction in demand.
This above-market performance can be attributed to our continued focus on trade lane optimization coupled with ongoing investments in field sales. This approach has also led to significant growth with a diverse mix of small to medium-sized and multinational companies in non-cyclical sectors. At the same time, we maintain our strong focus on best practice implementation, procurement excellence and standardization, structural optimization as well as active, day-to-day cost management. CEVA and our customers will now also maintain better shipment visibility through our global One Freight System.
In the US, CEVA’s Ground business is yielding positive results from its successful transformation program, reflected in improved net revenue margins.
Our robust Contract Logistics model resulted in a stable top line despite reduced economic headwinds. Contract Logistics EBITDA was $69 million, down 8.6% YoY in constant currency. Contract Logistics is back to top line growth due to a number of new business wins which are partially offset by low throughput in existing contracts.
We remain committed to investing in our future and have a number of start-up projects which have resulted in a temporary margin contraction but will deliver stronger returns in the near future. We also reduced our empty warehouse space by 11.8%, from 6.1% to 5.5% empty sqm, over Q1 2016 as a result of our continued sales focus on underutilized warehouses.
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CEVA - Making business flow
CEVA Logistics, one of the world’s leading non-asset based supply-chain management companies, designs and implements industry leading solutions for large and medium-size national and multinational companies. Approximately 41,000 employees in more than 160 countries are dedicated to delivering effective and robust supply-chain solutions across a variety of sectors where CEVA applies its operational expertise to provide best-in-class services across its integrated network. For more information, please visit www.cevalogistics.com.
SAFE HARBOR STATEMENT:
This news release may contain forward-looking statements. These statements include, but are not limited to, discussions regarding industry outlook, the Company’s expectations regarding the performance of its business, its liquidity and capital resources, its guidance for 2016 and beyond, and the other non-historical statements. These statements can be identified by the use of words such as “believes” “anticipates,” “expects,” “intends,” “plans,” “continues,” “estimates,” “predicts,” “projects,” “forecasts,” and similar expressions. All forward-looking statements are based on management’s current expectations and beliefs only as of the date of this press release and, in addition to the assumptions specifically mentioned in the above paragraphs, there are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including the effect of local and national economic, credit and capital market conditions, a downturn in the industries in which we operate (including the automotive industry and the airfreight business), risks associated with the Company’s global operations, fluctuations and increases in fuel prices, the Company’s substantial indebtedness, restrictions contained in its debt agreements and risks that it will be unable to compete effectively. Further information concerning the Company and its business, including factors that potentially could materially affect the Company’s financial results, is contained in the Company’s annual and quarterly reports, available on the Company’s website, which investors are strongly encouraged to review. Should one or more of these risks or uncertainties materialize or the consequences of such a development worsen, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. CEVA disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.