CEVA CEO Pattullo announces plans to retire

Global third-party logistics (3PL) services provider CEVA Logistics announced today that CEO John Pattullo will retire on October 12 and be replaced by Marvin O. Schlanger, CEVA’s Chairman of the Board, while Pattullo will remain on the CEVA Board of Directors.

Prior to joining CEVA in 2007, Pattullo John Pattullo served as COO of the EMEA division of Exel Supply Chain and is a 30-year veteran at Procter & Gamble in global marketing, logistics, and sales roles. He succeeded Dave Kulik, who transitioned to vice chairman of the board of directors of CEVA Group Plc., a subsidiary of Apollo Management Ltd., CEVA’s parent company.

“When John came to CEVA, he expressed his expectation of staying with the company for five years,” Schlanger said in a statement. “Under his leadership, the integration of TNT Logistics and EGL was successfully executed and the company’s unique customer-focused, end to end operating model successfully developed.  He has also assembled a world class leadership team.  All of this has allowed CEVA to serve our customers better and to grow faster than the market.  We want to thank John for his strong leadership of the company and look forward to his continued guidance as a member of our Board. I look forward to working with the talented and dedicated employees of CEVA as we execute our strategies to become the most admired company in the supply chain industry.”

Pattullo’s retirement comes at a time when there are many concerns regarding the global economy, especially in Europe where CEVA has a very large presence.

At last week’s CSCMP Annual Conference in Atlanta Pattullo said he views Europe as two separate continents, with Southern Europe being “more depressed than you can imagine” and worse than it is perceived to be. Northern Europe, specifically Germany, feels prosperous, according to Pattullo, with a still-growing economy.

In early August, CEVA reported second quarter revenue of $1.81 billion Euro or $2.2 billion U.S. which was up 5.5 percent annually. Revenues for its Freight Management unit, which is comprised of air, ocean and customs brokerage, were up 9 percent for the quarter, and its Contract Logistics business, which includes warehousing and dedicated transport, showed a 3 percent annual gain. Revenue for the first half of the year—at $3.52 billion Euro—or $4.3 billion U.S.—was up 3.5 percent compared to the first half of 2011.

While revenue was up for both the second quarter and first half of the year, CEVA’s EBITDA for the second quarter and the first half was down 13.6 percent and 10.5 percent, respectively.

“It was a challenging quarter,” Pattullo told LM in an August interview.” We saw customer sentiment become a bit more pessimistic and flat air and ocean margins. In southern Europe, we felt the impact of the economic downturn. It made for a challenging quarter with all of those things going on. As a company, I think we are adapting well during these tougher times. We have implemented a number of cost reduction programs, and our business development efforts, led by our new Chief Commercial Officer Inna Kuznetsova are going well, particularly on the Contract Logistics side. Our real bright spot is ocean, which continues to outperform the market.”

Under Pattullo’s watch CEVA has been making a number of important structural changes inside the company to help it run more efficiently, coupled with a major effort it labeled “impeccable execution” which focuses on its operations agenda.

CEVA delivered over 11,000 Kaizen in 2011, which are continuous improvement projects and had a 70 percent reduction in its IT downtime and a 16 percent improvement in its operations index, which is a basket of operations measures that it tracks.

And in 2011 CEVA also rolled out various structural changes, with its Project Uno for global standard processes in freight management, back office outsourcing in the finance area, and leveraging its scale in global operations, which the company said have helped to make the company more robust.

CEVA has also made major strides in the ocean forwarding market under Pattullo, which has seen steady growth and grown from the 35th largest ocean forwarding provider in 2006 to the number 7 currently, with a goal of being in the top five.

Pattullo said in recent years CEVA has moved from having a relatively high proportion of its volume managed to a bigger portion being controlled, citing the August deal it struck with H.J. Heinz Co. for a five-year agreement at 60,000 annual TEU as being controlled.

“We are thinking alike with our peers in terms of having the majority of our ocean business on the controlled side and not managed,” said Pattullo. “For us, that has been a shift because a lot of our early wins in ocean forwarding just 3-to-4 years ago were managed business.