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            november 17, 2019

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CIBE 2019

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CEVA earnings dragged down by Italian contract logistics problems


CEVA Logistics posted third quarter adjusted EBITDA of US$55 million for Q3 and year-to-date EBITDA of $198 million, down $27 million and $8 million respectively in constant currency. The decline in pre-tax earnings was blamed on problems at its Italian contract logistics unit.
The Switzerland-based group's Q3 revenues amounted to $1.8 billion, up 1.6 per cent on like period and up 4.7 per cent on constant currencies, while revenues for the first nine months of the year rose to $5.4 billion, reported London's Air Cargo News.
The company, which has announced plans to "deepen" its strategic relationship with major shareholder CMA CGM, said that the drop in EBITDA was "mainly due to provisions for Italian Contract Logistics business".
Two contracts in Italy and the bankruptcy of a local Italian partner for temporary staff have resulted in "additional unplanned costs" of $26 million in the third quarter and $42 million for the first nine months.
Revenue from the freight management division rose by 4.9 per cent on a reported basis in the third quarter compared to the same period in 2017. Freight management EBITDA fell by $3 million at constant currency to $22 million in the third quarter.
In the first nine months of 2018, revenue at Chinese joint venture Anji-CEVA amounted to $1 billion, up 17.6 per cent in constant currency year on year.
"This healthy revenue increase was fuelled by strong volumes growth in existing contracts, new contract implementations and the transfer of the Chinese CEVA CL business in July 2017," the company said. "In particular the new non-automotive division is gathering pace and winning significant new business."
EBITDA for the first nine months of the year was $99 million, including a capital gain from a fixed asset disposal of $28 million in Q3.
The company said it experienced "continued strong momentum" across all sales segments and business lines, with new business wins up approximately eight per cent year-to-date.
"Significant new contracts and extensions were won in the third quarter: in air and ocean freight, CEVA won contracts with technology and automotive customers, in contract logistics this was mostly with automotive, healthcare, consumer and retail clients.
In its outlook, CEVA confirmed its medium-term targets to grow revenue above market and to increase EBITDA margins from the 3.3 per cent achieved in 2017 to at least four per cent, "which should result in an additional approximately $100 million in adjusted EBITDA, excluding any additional benefits from the much closer cooperation with CMA CGM."
Chief executive Xavier Urbain said: "We are confident that we will further improve our performance and meet our medium-term targets. More importantly, we plan to intensify the cooperation with our strategic partner CMA CGM which will bring additional value for all our stakeholders."

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