Supply chain management company Ceva Logistics said its EBITDA (earnings before interest, taxes, depreciation, and amortization) for the second quarter ended June 30, 2015 totaled US$75 million, up 25% year-over-year in adjusted terms and up 31.7% in constant currency terms.
Ceva attributed the significant increase in profitability to its new business strategy. Implemented in January 1, 2015, the new model moved from the previous regional structure to localized country clusters with uniform standards of governance and business rules.
“The company turned in a solid second quarter performance in the face of several industry headwinds and significant exchange rate fluctuations,” it said.
Second-quarter revenue of $1.776 billion was down 10.2% year-over-year in adjusted terms but up 0.3% in constant currency, driven by volume growth that was partially offset by freight rates and fuel prices.
Freight management delivered significant EBITDA improvement in the second quarter, said the report. “The company’s continued focus on productivity increases, process improvements and effective transportation procurement drove 250 basis points of improvement in freight management margin in the second quarter.”
Division volumes held steady in the face of uneven global demand. Airfreight volumes were up just 0.7% year-over-year due to a weakening Asia-Pacific export market. Ocean freight volumes rose 4% year-over-year, reflecting solid growth in Europe.
Contract logistics maintained industry-leading adjusted EBITDA margins of 5.5% in the second quarter, up from 4.9% in the first quarter, driven by ongoing focus on underperforming contracts and effective warehouse space utilization. Revenue was up 0.9% year-over-year in constant currency.
“The benefits resulting from Ceva’s new operating model are accelerating,” said Xavier Urbain, CEO of Ceva. “As the second quarter illustrates, execution of our strategy is producing visible progress and increased profitability.”
Looking ahead, Urbain foresees “significant upside potential by continuing this focus on operational excellence and efficiency for both our customers and ourselves.”
Ceva’s new business pipeline in the second quarter rose above prior-year levels. Freight management was 7% above the prior year’s; contract logistics new business pipeline advanced 16% year-over-year. The technology and healthcare sectors performed well, while new business from small and medium-sized enterprises increased 21%.
In addition, Ceva has launched a new global project logistics division, reporting to Helmut Kaspers, chief operating officer of global air and ocean freight.
“This new division enables Ceva to enhance and provide knowledge transfer of its highly successful energy (oil, gas, renewal) sector services to other sectors, with a particular focus on industrials, aerospace and mining,” it continued.
The current project logistics global competence centers are located in Houston and Rotterdam, and will be expanding to Singapore, Shanghai, and Dubai by year-end.
