CEVA reduces debt, confirms drop in net earnings for Q4

Earlier this month, when Swiss 3PL CEVA Logistics released its preliminary results for 2018, it touted its reduction in debt and its potential growth prospects for 2019. Today, as it released its official fourth-quarter and full-year performance figures, CEVA official retained their optimism, but, like several other logistics firms, reported double-digit losses on fourth-quarter earnings before interest, taxes, depreciation and amortization (EBITDA), following a year of “structural changes.”

In Q4, which ended Dec. 31, 2018, CEVA Logistics saw revenues rise a modest 0.7 percent to US$1.9 billion, but reported an adjusted EBITDA of $50 million, which was a 12.3 percent drop from Q4 2017. For all of 2018, the 3PL’s revenues grew 5.2 percent to $7.36 billion, and had an adjusted EBITDA of $260 million, a 7.1 percent decrease, year-over-year, which included one-time costs totaling $54 million.

By “adjusted EBITDA,” CEVA included its 50 percent share of the joint-venture with China-based automotive logistics firm Anji, but “excludes specific items and share-based compensation cost.”

Key Financials for Q4

(US$ million)

Q4 2018 Q4 2017 Change YoY Change YoY constant FX
Revenue 1,908 1,895 +0.7% +6.6%
EBITDA (a) 50 57 -12.3% -5.7%
EBITDA margin 2.6% 3.0% -40 bps -40 bps
Adjusted EBITDA (b)                      62 71 -12.7% -6.1%


Key Financials for full year

(US$ million)

2018 2017 Change YoY Change YoY constant FX
Revenue 7,356 6,994 +5.2% +5.4%
EBITDA (a) 198 230 -13.9% -10.4%
EBITDA margin 2.7% 3.3% -60 bps -50 bps
Adjusted EBITDA (b)                      260 280 -7.1% -4.4%
Net Debt as of 31 Dec. 1,192 2,089 -43%  
(a) EBITDA excludes specific items and share-based compensation cost (SBC) in the table and in the whole document.
(b) Adjusted EBITDA includes the 50% share of the Anji-CEVA joint venture and excludes specific items and share-based compensation cost.

For its outstanding debt, however, CEVA said that through a series of “productivity, cost reduction and other margin improvement initiatives,” it was able to reduce that figure by 43 percent, compared to 2017, from $2.09 billion to $1.19 billion.

Despite the mixed results, “CEVA finished the year with sound commercial performance in 2018,” said Xavier Urbain, CEO of CEVA Logistics. “Margins have been impacted by one-time costs, in particular Contract Logistics in Italy.”

In CEVA’s Freight Management division, operations “have felt limited impact from the US-China trade tariffs discussion,” the company said. Air volumes dipped by 0.7 percent, year-over-year, “mainly from the earlier loss of certain customers and a selective approach to new business,” CEVA said. However, air yields have increased by 6.7 percent, y-o-y, to $688 per tonne.

Meanwhile, Contract Logistics EBITDA was down by a significant 31.8 percent, y-o-y, to $105 million for 2018. Despite many productivity improvements across various contracts and geographies and continued gains on focus contracts, two contracts in Italy and the bankruptcy of a local partner for temporary staff resulted in additional unplanned costs of US$42 million in 2018 (including provisions taken for future years). CEVA has put into place a plan to resolve the issues in Italy. This plan is currently under way.

“Looking ahead, we are confident in our ability to meet our enhanced medium-term targets with the support of our strategic partner CMA CGM,” Urbain said, referring to a recent partnership with seafreight logistics form CMA CGM, which CEVA hopes to settle by April 17.

“The organization is on track to accelerate its transformation and turnaround action plan in the next three years and beyond,” Urbain added. By 2021, CEVA said it expects to exceed $9 billion in revenue and an adjusted EBITDA of between $470 million and $490 million.

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