CEVA Logistics has reported that its third quarter (Q3) results were impacted by its Italian contract logistics business with adjusted EBITDA (earnings before interest, tax, depreciation and amortization) falling year-on-year (YOY).
EBITDA was down in Q3 YOY by 35.3 per cent to $55 million and year-to-date (YTD) it said it fell YOY to $198 million – a fall of $27 million and $8 million respectively in constant currency.
However, revenue in Q3 was up YOY by 1.6 per cent to $1.81 billion and YTD revenue was up YOY by 6.8 per cent to $5.44 billion. CEVA said there was “good new business momentum”.
The company said two contracts in Italy and the bankruptcy of a local Italian partner for temporary staff have resulted in additional unplanned costs of $26 million in Q3 and $42 million YTD but CEVA said a “plan is currently being executed to address and resolve the issues in Italy”.
CEVA said revenue in the Freight Management division increased by 4.9 per cent on a reported basis and by 6.8 per cent in constant currency in Q3 compared to the same period in the prior year.
Freight Management EBITDA decreased by $3 million at constant currency to $22 million in Q3 with better revenues it said “offset by challenges in North America relating to the increased cost of transportation in our ground business due to driver shortages, partly mitigated by improvements in the VAS (value added services) operation”. For the nine months of 2018, EBITDA was $64 million, up $9 million YOY in constant currency.
CEVA said significant new contracts and extensions were won in Q3 and in Air and Ocean freight, CEVA won contracts with technology and automotive customers, in Contract Logistics this was mostly with automotive, healthcare, consumer and retail clients.
It also added that the partnership with CMA CGM “started to deliver additional opportunities” and the company is investing in its sales force in order to accelerate sustainable growth in strategic geographies and segments.
CEVA Logistics completed a refinancing in August this year and is to deepen its strategic relationship with CMA CGM which has taken, which will be implemented in the coming months.
Chief executive officer, Xavier Urbain said: “CEVA continues to reduce its cost base, with a strong focus on productivity addressing underperforming activities both in FM and CL. Most of our operations continue to perform well and our new business performance is promising.
“However, in the third quarter, margins have been adversely impacted by one-time provisions taken in Contract Logistics in Italy. Looking ahead, we are confident that we will further improve our performance and meet our medium-term targets. More importantly, we plan to intensify the cooperation with our strategic partner CMA CGM which will bring additional value for all our stakeholders.”