CEVA targets annual revenue of €10bn in 2010
published: cw 50, 2007 in Logistics & ShippingCEVA Logistics, the global contract logistics and freight management group created from the merger of the former TNT Logistics and Eagle Global Logistics (EGL), is looking to achieve more than 60% total growth in annual revenue over the next three years with a view to hitting €10bn (US$13.5bn) in 2010. Profit-wise, the aim is to sustain a margin of about 5.5%.
Those were the key financial targets, or at least “aspirations”, outlined by CEVA CEO John Pattullo at a press briefing in London, England, on Friday (November 30) following publication of the group’s 2007 Q3 and first nine months results*.
He explained that following the acquisition of US forwarder EGL in August, Netherlands-based CEVA was now the fourth largest global logistics provider - behind DHL (US$29bn), Kuehne + Nagel ($14bn) and Schenker ($13bn) - with an annual turnover of about $8bn (€6bn) in 2006 and an anticipated “modestly higher” figure for 2007.
Pattullo said the group had now defined three strategic imperatives – unity, excellence and growth. Elaborating on those points, he said the ‘unity’ aspect meant genuinely creating one company called CEVA. “This is not going to be just TNT and EGL working together under the same umbrella.” The ‘excellence’, he continued, referred to “operational excellence”.
Moving on to talk about ‘growth’ plans, Pattullo said that despite the “great strengths” of TNT and EGL, both had been growing more slowly than their respective markets. “TNT was growing at about 1% in contract logistics markets which were growing at 7-8%. EGL was at 9% in markets which were growing at 12%. Our goal is to exceed market growth,” he stated, later adding that CEVA’s actual future target figure was 15% plus.
Asked about the annual revenue objective of €10bn ($13.5bn) in 2010, Pattullo agreed that was a “demanding goal” and stressed it was a figure which the group aspired to internally rather than one which would be built firmly into its financial models. He played down suggestions that figure related to the size of business needed to meet the group’s financial commitments, the expectations of shareholder Apollo Management (the private equity firm which bought TNT Logistics, subsequently rebranded CEVA, in late 2006) or the scale needed to be a genuine global competitor. When it came to margins, he stated, “we might have to take a bit of a dip to sustain growth but we should be able to sustain a figure of about 5.5%, which is pretty competitive within the industry”.
Pattullo also indicated that most of CEVA’s planned revenue growth would be generated organically. “Major acquisitions are not on the agenda. There may be some small, sweet opportunities which emerge and it would be stupid not to look at them. But they will be small bolt-ons.”
*For 2007 Q3 to September 30, CEVA generated net sales of €1.33bn and EBITDA (earnings before interest, taxes, depreciation and amortisation) of €86.9m, equivalent to 6.5% of sales. For the nine months to September 30, the respective figures were €3.01bn, €186.9m and 6%. The annualised revenue figure, added Pattullo, was now €6.2bn, with underlying revenue growth running at about 4%.
Source: Transport Intelligence
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