Kuehne+Nagel Beats Q1 Forecasts but Sea Logistics EBIT Drops 46% as Middle East Disruptions and a Weak Dollar Squeeze Margins

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Kuehne+Nagel International AG reported first quarter 2026 results on April 24 that exceeded its own guidance, but the world’s largest sea and air freight forwarder revealed a sharp split between its transport and warehousing divisions as Middle East disruptions and a 13% slide in the US dollar against the Swiss franc weighed on ocean freight earnings.

Group net turnover fell 12% year on year to CHF 5.6 billion, while recurring EBIT, which strips out a CHF 35 million gain from a German property sale, came in at CHF 308 million, down 23% in reported terms but 17% at constant currencies. Net earnings dropped 16% to CHF 245 million. Despite the headline declines, management raised the lower end of its full year recurring EBIT guidance to CHF 1.25 billion from CHF 1.20 billion, keeping the upper bound at CHF 1.40 billion.

The ocean freight division bore the brunt. Sea Logistics EBIT fell 46% to CHF 113 million on volumes of 1.01 million TEU, down 2% year on year. The company attributed roughly 1.5 percentage points of that volume decline to developments in the Middle East, which also drove up service intensity and operational costs. The comparison was further distorted by exceptionally strong volumes in Q1 2025, when shippers rushed cargo ahead of tariff measures linked to “Liberation Day.”

On a sequential basis, however, the picture looked more encouraging. EBIT per TEU improved 13% from Q4 2025, rising to CHF 112 from CHF 99, as cost reduction measures took hold. Gross profit per TEU stabilized at CHF 445, broadly flat quarter on quarter when excluding currency effects.

Air Logistics proved more resilient. EBIT declined just 4% to CHF 111 million on volumes of 516,000 tonnes, essentially flat year on year. Demand from semiconductor and cloud infrastructure customers continued to support yields, which came in above company guidance. The conversion rate, a measure of how efficiently gross profit converts to operating profit, improved to 27% from 26% a year earlier. Middle East tensions created a short term tightening of airfreight capacity, prompting stronger demand for charter solutions.

The two ground side divisions turned in contrasting trajectories to the freight forwarding units. Road Logistics posted EBIT of CHF 25 million, up 32% year-on-year, on net turnover growth of 9% at constant currencies. The unit gained market share across all regions and reported rising demand for its AI enabled customs clearance tools. It also established overland “landbridges,” including trucking services from Saudi Arabia to the United Arab Emirates, to help customers bypass maritime bottlenecks.

Contract Logistics delivered net turnover growth of 5% at constant currencies and recurring EBIT of CHF 59 million, up 11% excluding foreign exchange effects. The division opened new distribution centers in the Americas, the United Arab Emirates, and Singapore, and had more than 30 new contracts in implementation at quarter end. Its trailing 12-month return on capital employed held at roughly 25%.

Foreign exchange translation, principally driven by the weaker US dollar, created a 7% drag on both EBIT and net earnings. The Swiss franc averaged 0.78 against the dollar in Q1 2026, compared with 0.90 a year earlier.

CEO Stefan Paul pointed to cost discipline as the key lever. The efficiency program announced in October 2025 delivered savings ahead of plan, and the company targets at least CHF 100 million in gross savings for the full year. The workforce grew to 85,372 employees from 82,315 a year earlier, reflecting expansion in Contract and Road Logistics.

Free cash flow rose 12% to CHF 194 million, supported by CHF 75 million in proceeds from the German property sale and leaseback. Working capital intensity edged up to 6.0%, above the company’s guidance corridor of 4.5% to 5.5%, though management said the increase reflected seasonal phasing rather than a structural shift.

Kuehne+Nagel described itself as well positioned to navigate ongoing geopolitical and trade uncertainty, but cautioned that sea and airfreight demand growth would likely track GDP at best. The next reporting date is July 23, when half year results will show whether the cost program can offset a potential further softening in global freight demand.