“In our first full year as an integrated business, we have performed well in difficult trading times and believe we have the momentum and capability to drive the business forward. We intend to achieve this by focusing on three areas: gaining market share, focused cost containment and strengthening our core capabilities,” commented CEVA Logistics CEO John Pattullo.
CEVA Logistics, a leading global supply chain management company, today announced consolidated revenues of €6.3 billion for fiscal year 2008 (2007: €4.8 billion) and strong organic growth of 5.3%, exceeding market growth of 2% - 3%1
In CEVA’s first full year of operating as a combined entity following the merger with EGL in August 2007, it is clear that providing customers with integrated freight management and contract logistics around the world has benefited the Group as it announces record new business wins of €1.7 billion. The pipeline for potential new business is at its strongest ever as many companies seek to focus on core competencies by outsourcing supply chain operations. CEVA’s 2008 rate of converting pipeline opportunities to wins is also at an all time high.
In 2008, we completed the integration of our business into one operating unit under the CEVA brand. We now have an integrated business model in all regions with combined regional teams driving both contract logistics and freight management businesses. This has enabled us to reduce regional overheads and to offer a truly integrated proposition to our customers. Evidencing the success of our business strategy, our cross selling of services in 2008 increased to a new high of €230 million.
CEVA has not been immune to the economic slow down. In Q4 2008 we saw a reversal in recent revenue and profit growth trends. The main contributory factors were customer volumes reducing particularly in airfreight and the inbound automotive sector. This resulted in revenue of €1,567 million (2007: €1,680 million) and EBITDA of €57 million (2007: €100 million) for the quarter.
The Group’s senior management are working hard to offset the ongoing impact of the world’s turbulent economy with a number of cost containment programs. In addition to the cost saving programs, such as LEAN and Procurement that were implemented in 2008, management has recently launched new cost saving programs, which are expected to deliver in excess of an incremental €100 million of reduced costs in 2009.
The business has no material debt repayments due until November 2012. Cash generated from operations amounted to €300 million in 2008, which was more than sufficient to meet interest and tax requirements but before specific items. Total committed headroom at the year end stood at €217 million. Throughout 2009 CEVA will continue working to add new liquidity facilities and further reduce working capital.
The business continues to focus on building its capabilities in order to deliver greater value for customers. This has included ongoing development of the Company’s Operations Excellence program which includes: applying bespoke LEAN methodologies to realize efficiency through waste reduction, Zero Defect Start-ups, a rigorous project management methodology and Smart Solutions – products developed on the basis of experience gathered from around the world.
The outlook for the first quarter of 2009 continues to follow the same trends as seen in Q4 2008. Over the first two months of 2009, CEVA has continued to see relatively weak overall transaction volumes and reduced freight flows, broadly consistent with the prior quarter (especially in automotive-related sectors), and we expect more of the same for the remainder of Q1. Based on these current trends, CEVA currently expects Q1 2009 revenues in the range of €1.3 billion to €1.4 billion and EBITDA before specific items of €27 million to €37 million. CEVA also expects to have total debt net of cash of between €2.6 billion to €2.7 billion at the end of Q1 2009 (31 December 2008: €2.5 billion). Of this increase, €110 million is anticipated due to the strengthening of the US dollar.
In conclusion, the first full year as an integrated business has shown overall good performance in difficult trading times. CEVA stands committed to meeting current challenges and believes it is well positioned for continued progress.
1 Based on market information; IATA, Drewry, Merge Global, annual reports, press releases and company estimates etc.
2 EBITDA excludes the impact of specific items which are significant non-recurring items such as restructuring and integration costs, rebranding, costs and certain legal expenses.
3 The 2007 financials are shown as if the acquisition of our freight management business had occurred on 1 January 2007 instead of the actual acquisition date of 2 August 2007.
About CEVA - Making Business Flow
CEVA Logistics (cevalogistics.com) is a leading global supply chain management company. We provide end-to-end design, implementation and operational solutions in contract logistics and freight management to large and medium-sized national and multinational companies. CEVA employs circa 50,000 people and runs an extensive global network with facilities in over 100 countries. For the year ending 31 December 2008, the Group reported revenues of €6.3bn.
The statements included in this news release, and other statements that are not historical facts, may contain forward-looking statements. In addition to the assumptions specifically mentioned in the above paragraphs, there are a number of other factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the process of combining EGL and CEVA, the actual effects of recent and future regulatory changes and technological developments, globalization, levels of spending in major economies, the economic downturn in Asia, Europe and the US, including the economic downturn in the automotive sector, levels of marketing and promotional expenditure, actions of competitors and joint venture partners, employee costs, future exchange and interest rates, changes in tax rates, unexpected costs of future business combinations or dispositions and other factors detailed in risk factors and elsewhere in CEVA most recent Annual Reports. 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. 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.