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«We can reach our new targets – but it won't be easy» |
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| Interview given to Rolf Arpagaus, chief editor of awp Finanznachrichten, in August 2011.
Mrs. Ribar, throughout the financial crisis, Panalpina refrained from communicating financial targets. Then, at the Investor Day, you said that the aim was to increase EBITDA to 20% of gross profit by 2014. Yet Panalpina was in this position back in 2007...
That was back in the «high times», and also included the oil and gas business in Nigeria. The market has changed markedly since then. Our sector can no longer work on the assumption that things will be the same as they were before the financial crisis. And there are new players – the environment has become more competitive. To make 20% will not be a Sunday stroll! We can do it, but it won't be easy. We will have to work hard to get there. |
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| How do you want to reach this level of profitability in the current situation?
We are supplementing our core business of air and ocean freight with supply chain solutions that bring added value. We are also expecting significant growth in the very profitable project business area, as well as in our oil and gas business. Furthermore, we have made great progress in terms of productivity, and these efforts will bear their first fruits in the next two to three years. So a few components are coming together that will help us to reach our profitability target.
You have decided against a greater focus on contract logistics, in other words against traditional warehousing services. How come?
We want to offer our customers solutions, not capacity. What’s the point of having a huge amount of storage space if we can't sell it? That's why, as I said before, we only offer logistics services that generate added value. We plan to invest more to secure our in-house knowledge in this area. But it's also about bringing what Panalpina has to offer closer to the surface.
Do customers know too little about what they can expect from Panalpina?
Without a shadow of a doubt. I am always finding customers who think we are just a simple air freight company. We have to work harder here. Appointing a head of our logistics business enables us to illustrate more clearly what our services are and what we can do. |
| Our sector can no longer work on the assumption that things will be the same as they were before the financial crisis.
Monika Ribar, CEO |
| Does this mean that too little management capacity has been devoted to logistics so far?
Quite honestly, yes. Up to now we have just let this area of the business run itself. Logistics remains a supplement to our core business, but it is gaining an entirely new significance. So all in all, the strategic direction that was unveiled at the Investor Day is essentially nothing new. The only difference is that we are now a focused company.
So was Panalpina spreading itself too thin?
I definitely think that it might have been over the past few years. We have realised that we can't be everywhere at once, which is why we have concentrated most of our sales activities on ten sectors – our "Industry Verticals". And we are looking to expand our skills in these sectors, to ensure that we are – or that we remain – our customers' supplier of choice.
You lost a lot of customers in the profitable oil and gas business as a result of what happened in Nigeria. Since then, though, Panalpina has improved its compliance regulations and processes. Have customers started to come back?
Not all of them – that doesn't happen overnight. But business continues to come back. For example, in 2007 we lost all contracts for what was at that time our biggest oil and gas customer. Three weeks ago, we received our first invitation to a proposal from the same customer since that date. The prospects for the industry look extremely bright for the next few years, and over time, this will bring us additional business.
Your expectations of market growth are now around half of what was achieved in the ‘noughties’ before the financial crisis. What is different from before?
The market was overheated – to an extreme degree in some areas. Everyone thought the sky was the limit and wanted to produce in China. The crisis brought us back down to earth and gave us a reality check. Today, we see ourselves differently: we have returned to more normal – and above all, better thought-out – growth.
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| | We have realised that we can't be everywhere at once, which is why we have concentrated most of our sales activities on ten sectors – our "Industry Verticals". Monika Ribar, CEO |
| You want to grow faster than the market for the next three years, but you don't want to make specific predictions.
We have made a clear commitment to sustainable and profitable growth, but are not looking for growth per se. We are not going to enter a size war. The growth we want should be driven far more by opportunity. To maintain our flexibility, we have not set ourselves concrete volume targets that have to be reached for the sake of it.
Holes in organic growth can be patched by acquisitions.
I am convinced that our strategy will enable us to maintain our market position. For us, acquisitions are merely an option: above all, we are planning to invest our funds in the business and in the organic growth of that business. And to be honest, we have been exploring potential acquisitions for two or three years, and have yet to find anything that matches our strict criteria.
The current strength of the Swiss franc do make it easier to reach a decision, dosen't it?
It would do, certainly, but we can’t let that be a criterion. No, we aren’t influenced by that.
How much could Panalpina part with if a suitable company could be found?
Our balance sheet includes CHF 250 million in free cash for investments. But you first have to deduct dividends from that, as our defined goal is to return 30 to 40% of profits to shareholders again next year.
What is the situation regarding a special dividend or a share buy-back?
These are lower-priority options. As I said, we would rather put the money into our own business if the right opportunities arise.
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| | We have made a clear commitment to sustainable and profitable growth, but are not looking for growth per se. We are not going to enter a size war. Monika Ribar, CEO |
| Panalpina wants to grow in the emerging markets, but so does everyone. Doesn’t that turn the spotlight more strongly on acquisitions?
I don't see this being the trigger for takeovers. From the other perspective though, there are plenty of local players in the emerging markets who want to go global. I think this could bring about more acquisitions within the industry.
Turning to the opposite question then, will Panalpina still be an independent company in ten years’ time?
That is quite clearly our goal. We are convinced that there is a place in the market for a player like Panalpina. We have the requisite size, but we are also agile. Nevertheless, the question remains as to whether the really big conglomerates have provided the value that was hoped for when they were formed.
Quite apart from the fact that any potential buyer would have to get past your main shareholder, Göhner Stiftung, and its 40% holding. Will Panalpina’s shareholder structure stay the way is?
I certainly do not anticipate any changes in the foreseeable future. We maintain a very good relationship with the Göhner Stiftung – they are a very loyal shareholder.
Copyright (c) 2011 awp Finanznachrichten |
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Monika Ribar took over the operational management of Panalpina on 1 October 2006. She was appointed to the post of Chief Executive Officer (CEO) only one year after accepting that of Chief Financial Officer. The Swiss citizen has been employed by the logistics company since 1991 and has been a member of the Executive Board for over six years. Having graduated in business administration from the University of St. Gallen, Monika Ribar began her career in the Controlling department of the chemical group BASF in Vienna. Three years later she returned to Switzerland and worked in Zurich for Fides – now KPMG – before joining Panalpina. For the past few years she has served on the board of directors of Julius Bär and Logitech. Curriculum Vitae
For further background information see our Customer magazine Connect
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