CEVA reports improved financial performance

2/24/2018

Global supply chain management company CEVA Holdings has reported an improved financial performance, including adjusted EBITDA earnings of US$280 million for the full year 2017, up $31m in constant currency.

Revenue of $7 billion for full year 2017 was up by 5.4% in constant currency, thanks in part to a “good fourth quarter with strong growth and improved profits”.

The improved adjusted EBITDA of $280 million was helped by the group’s “rigorously executed” excellence programme, which delivered more than $120 million in annualized cost savings. 

Full year revenue was $6,994 million, up 5.4% in constant currency. Revenue in Q4 was $1,895 million, up 5.7% in constant currency vs prior year, the fifth consecutive quarter of strong growth.

Adjusted EBITDA was $71 million in Q4 and $280 million for the full year, up $31 million in constant currency. CEVA said the underlying profitability improvement “was even stronger but partially offset by the temporary margin pressure from market conditions in freight management and the increase in variable compensation related to the good performance in the year”. 

Overall, freight management revenue was $3.3 billion in 2017, up 8.6% in constant currency, while net revenue was $875 million, stable versus last year. Cost savings allowed us to offset the temporary net revenue margin pressure from rate increases. As such, EBITDA was $76 million, up $13 million in constant currency.

On the group’s freight management business, CEVA said: “In Q4, the peak season once again was challenging with tight capacity in airfreight, notably on the China-US routes.  Air freight volumes in 2017 were up 11.6% year on year with particularly strong Q4 performance on transpacific trade lanes. CEVA also maintained solid yields with yields up 8.5% versus prior year in Q4 due to pricing and procurement measures.”

Ocean freight also had a good Q4 with volumes up 6.9% year on year. 

CEVA said the Excellence Programme had resulted in important process and cost improvements; “productivity was up 12.9% in ocean freight. Additional process automation is expected to drive further productivity improvements,” the company said. 

Revenue growth in Contract Logistics was 2.8% in constant currency and accelerated versus prior years, CEVA said, adding: “Contract Logistics had a number of important business wins in recent months which, once implemented, are expected to support the growth in 2018. We experienced strong customer traction in a number of verticals, notably consumer & retail including e-commerce, industrials and automotive.”

EBITDA for the full year in Contract Logistics stood at $154 million, up $9 million in constant currency. Normalised for property disposals in 2016, the underlying improvement is $25 million which reflects the focus on productivity improvement in key contracts through the Excellence Programme.

“I am pleased to report a strong finish to a good year,” said Xavier Urbain, CEO of CEVA. “Our Excellence Programme has delivered important cost savings and has supported much better profits despite market headwinds. At the same time, revenue growth across Contract Logistics and Freight Management has been very good. With stronger revenue, profits and cash flow, we have delivered on all our objectives.

“CEVA’s competitive position has much improved as evidenced by the important business wins we have had in recent months. Through the transformation we have initiated in 2014, CEVA is a much stronger company now. However, we still have ample opportunities to improve margins and deliver even better service to our clients – this is what we are working on.”

“I am confident that we can keep the momentum and can continue to improve our results going forward.”