CEVA reports 6 percent annual loss in the first quarter
May 22, 2013 - LM Editorial
Citing difficult market conditions, global third-party logistics (3PL) services provider CEVA Logistics yesterday reported first quarter earnings of $1.6 billion Euro or about $2.8 billion U.S., which represented a 6 percent annual decrease.
Company officials said that CEVA’s quarterly results were impacted by various factors, including: overall soft global logistics markets; loss of airfreight volume with some business switching to ocean transport; exposure to Eurozone markets; and underperforming Contract Logistics contracts.
For its individual segments, CEVA said that Freight Management revenue was down 6.8 percent annually, due to softness in airfreight volumes, coupled with challenging market conditions. Its Contract Logistics business was off by 5.9 percent compared to last year due in part to the sale of CEVA’s Pallecon container business early this year. And the subsequent impact of myriad contracts terminated as part of the company’s cost reduction program launched in late 2012 and softer volumes in Europe and other key markets also factored into quarterly performance.
Prior to this earnings release, CEVA said it reached an agreement with its major note holders to recapitalize its balance sheet and raise new capital. CEVA said that through these efforts it will reduce its consolidated net debt by more than $1.7 billion ($1.3 billion euros) and its annual cash interest expense by more than $170 million ($130 million euros) and also receive a capital infusion of a minimum of $301 million ($230 million euros) for investment in its business plan.
CEVA CEO Marv Schlanger said that these efforts will make for a stronger balance sheet for CEVA, which will enable the company to grow faster and better compete in the logistics and supply chain marketplace, as well as give CEVA the flexibility of making additional capex investments, which will allow it to better serve its customers as they grow globally and build and sell new supply chain products.
And in a recent interview with LM, Schlanger said with this recapitalization, CEVA actually accomplished more than it had set out to do and achieved more than it originally estimated it would, with the final figures for consolidated debt being higher and additional cash on the balance sheet than previously estimated.
“We consider the transaction to be successful and are very appreciative of the support shown to the company by our investors and lenders and think this represents and endorsement of support for CEVA’s business model of CEVA as a value proposition for our customers,” he said.
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