Kuehne+Nagel has scaled back its cost-cutting programme as it responds to changing market conditions.
The forwarder had originally estimated annual restructuring cost savings net of inflation of around CHF200m, but this has now been reduced to around CHF100m.
Speaking on a conference call following its half-year results announcement, the forwarder's chief financial officer Marcus Blanka said this was in part down to inflation levels falling but also because the the project had been scaled back somewhat due to an improved market outlook.
Blanka explained there were two different types of restructuring costs. Firstly, centred on "rightsizing of the operational workforce" and secondly on its decision to axe its regional structure in favour of a country/cluster-led set up.
The new structure is going ahead as planned but the rightsizing has been reduced, he explained, due to the improved market conditions.
"When we made the decisions to deploy these two waves, I think we were still in a situation where we were uncertain around the business development going into the second half of 2024.
"And we realised that there's an improving situation or an improving expectation for volume going forward into the second half 2024.
"Hence, we held back slightly on the sales management, specifically on the sales force piece."
This would allow the company to "go back to our growth mode to benefit from the upswing in the second half 2024".
"Our original thinking was really cost reduction in a declining market environment. We have changed our view on that expectation, hence [the] smaller cost reduction costs."
He added: "Let's not forget that we had mentioned the CHF200m pre-inflation. So now we're at the CHF100m post-inflation target for [the] 2025 full year number."
The company first began its efforts to reduce its headcount in the fourth quarter of last year.
At the time, the company planned to reduce its headcount by 1,300 and also implement a hiring freeze. Around 40% of the reduction had already been implemented by the end of the year.
The "rightsizing" element of the restructuring was expected to reduce annual costs by around CHF100m at that time.
Meanwhile, the decision to create a new reporting structure was announced in April.
It was designed to speed up decision making between head office and the country level, with cluster and national managers reporting directly into the management board of K+N.
During the second quarter, healthcare and semiconductor shipments, Asia exports and Red Sea disruption helped drive up the forwarder's airfreight volumes 7.3% to 517,000 tonnes.
Net turnover in K+N’s air logistics division in the fourth quarter was CHF1.8bn, up 9% year on year.
However, despite the increase in volumes and generally robust rates in the market during the quarter, profit for the division was down slightly.
Gross profit was down 4% and earnings before interest and taxes (EBIT) was down 17%.
