Is CEVA Logistics beginning to dig itself out of hole?

CEVA Logistics reported its second-quarter earnings today, posting a net loss of US$45 million – unchanged from 2Q17. For the first half, CEVA reported a net loss of $112 million, compared to a loss of $102 million in 1H17. Revenue in the second quarter was up 7.4 percent year-over-year to $1.85 billion, but operating income (EBIT) dropped 82.8 percent to just $5 million. The story was much the same for the first half, with revenue up 9.7 percent to $3.64 billion and EBIT down 59.5 percent to $15 million.

Breaking the results down by operating segment:

Freight Management: CEVA’s Freight Management segment reported second-quarter revenue up 8.1% to $853 million, while segment EBITDA jumped 35 percent to $27 million. The company said that while it saw strong yields in its air freight operations (net revenue per tonne was up 10.9 percent), it was still seeing a “time lag” between the loss of air freight forwarding customers and the onboarding of new customers (total air tonnage in the quarter was down 1.3 percent).

Contract Logistics: CEVA’s Contract Logistics segment reported revenue up 4.7 percent in the second quarter to $995 million, as segment EBITDA increased 2.6 percent to $39 million. The company said an overall strong performance was negatively impacted by ”issues in a limited number of operations in Italy and the US”, but that it felt these issues had been “largely addressed” and should have less impact in the second half of 2018.

Overall, CEVA acknowledged its suffering margins, stating that it would “continue to reduce our cost base, work on productivity and address our underperforming activities,” adding that, “In the first half of the year, margin growth has been skewed towards freight management [and] we expect contract logistics to make more progress in the second half of the year, as we have largely addressed the issues.”

Earlier this year, CEVA became a public company on the Six Swiss Exchange, raising $820 million, which it said would help to repay existing debt. Discussing the IPO, CEVA said it “expects to reduce its finance charges by more than $100 million annually, subject to prevailing interest rates and currency drawings.”

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