Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Panalpina Group
November 20, 2013
Capital Markets Day 2013
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Agenda
Time
Presentation
08.30 - 09.00
Speaker
Registration and welcome coffee
09.00 - 09.40
Overview of corporate strategy and critical success factors (incl. Q & A)
Peter Ulber, Chief Executive Officer
09.40 - 10.15
Air Freight: Leveraging a unique model (incl. Q & A)
Lucas Kuehner, Global Head of Air Freight
10.15 - 10.45
Guest speaker: Baker Hughes (incl. Q&A)
John Newcaster, VP, Distribution & Logistics
10.45 - 11.15
Coffee break
11.15 - 11.45
Ocean Freight: Unlocking the full potential (incl. Q & A)
Frank Hercksen, Global Head of Ocean Freight
11.45 - 12.20
Logistics: Delivering tailor-made solutions (incl. Q & A)
Mike Wilson, Global Head of Logistics
12.20 - 12.50
Sales: Realizing the commercial opportunity (incl. Q & A)
Karl Weyeneth, Chief Operating Officer
12.50 - 14.00
Buffet lunch
IT: Enabling the business transformation (incl. Q & A)
Rod Angwin, Chief Information Officer
Guest speaker: SAP
Franz Hero, SVP, Transport & Logistics
14.50 - 15.20
Boosting productivity and measuring success (incl. Q & A)
Robert Erni, Chief Financial Officer
15.20 - 15.30
Wrap-up and concluding remarks
Peter Ulber, Chief Executive Officer
14.00 - 14.50
15.30 - 16.00
Coffee and cookies / end of event
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Overview of corporate strategy and critical success factors
Peter Ulber
Chief Executive Officer
Capital Markets Day, November 20, 2013
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Objectives of today‟s Capital Markets Day
 Provide clarity on strategy and priorities
 Share plans on how we intend to get there
 Create understanding of how we
differentiate ourselves
 Engage with the leadership team behind
the scenes
 Contribute insights from a major customer
and a strategic supplier
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Key observations after a few months in office
 Open culture – receptive to fresh ideas
 Strong customer focus – service mentality
 High quality of engaged staff
 Well entrenched compliance mindset
With the potential to improve:
 Alignment with company‟s strategy and goals
 Standardization of processes and systems
 Financial transparency (internal / external)
 Underperforming operations
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Overview of strategy and target setting process 2013
BoD
ExCom
ExCom
BoD
Senior mgmt
Targets 2014
Strategy
workshop
Strategy
workshop
Approval strategy
& targets 2014
Approval strategy
& targets 2014
Info strategy &
targets 2014
Submission country
breakdowns
14 May
17 July
26 Sept
24 Oct
5/6 Nov
15 Nov
Strategy review and financial targets
Breakdown of targets
2014 at country level
Capital
Markets Day
End of
process
20 Nov
20 Dec
Field review of
targets 2014
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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We have sharpened our vision and formulated a mission; values
have been reconfirmed
Vision
Be the most customer focused global provider of freight forwarding and
logistics solutions – a trusted, valued and respected partner
 How we want to be known
Mission
Leverage our global presence and competence in Air and Ocean Freight
by collaborating with our customers to unlock value in their supply chains
and together build smart and efficient end-to-end logistics solutions
 What we will do to make our Vision come true
Values
Performance, Integrity, Professionalism
 What drives our behavior to achieve the Vision and Mission
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Our strategy is clear and focused on 4 dimensions
Product mix
Growth model
Geographic coverage
Customers
 Targeting stable and sustainable growth…
 …while working towards a lean and efficient cost structure
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Strategic priorities: Product mix - key elements of our business
model
Specialty
Projects
Oil & Gas
Differentiator
Logistics
 Value Added Services
 Distribution Solutions
Air Freight
Proven expertise for Energy, Mining and
Engineering customers
Growing competence to complement our
end-to-end (E2E) offering for int’l customers;
Standard warehousing and standalone
overland networks are not strategic activities
Ocean Freight
 Among Global Top 5
 Among Global Top 5
 Commercial and
Own capacity
 FCL, LCL and breakbulk
 E2E offering incl.
customs services
 E2E offering incl.
customs services
Core Competence
Air and Ocean Freight forwarding are the
foundations of our business
Objective: More balanced and differentiated product mix
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Strategic priorities: Geographic coverage
 Expand global footprint by developing:
 Middle East, Africa and CIS  growing economies, creation of new MEAC Region
 USA  Market potential currently not fully tapped
 Asia  Increase market share on Intra-Asia and Asia outbound lanes
 Strengthen position in key European markets, in particular the UK, the
Netherlands, France and Italy
 Establish own operations in selected strategic agent countries (focus on
growing economies)
 Reach or secure position among Top 5 in Air and Ocean Freight forwarding in
every major operational country
Objective: More focus on growing economies and market share
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
As of January 1, 2014: Four Regions with less complexity and
more focus on growth economies
EUR
AME
MEAC
APAC
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Strategic priorities: Customers
 Target companies with international cargo flows, not domestic players
 Industry Vertical and investment focus:
 Grow: Oil & Gas, Healthcare, Consumer & Retail, Fashion and selected Manufacturing
 Leverage: Technology and Automotive
 Re-allocate Sales investments to create a balanced portfolio of profitable
large and medium-sized accounts matched to product and geography
requirements
 Use IT as a key differentiator by providing sophisticated analytics and
advanced customer-facing information systems
Objective: Balanced customer portfolio supported by advanced IT solutions
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Strategic priorities: Growth model
2014:
 Focus on execution of strategy, implementation of Operations Transformation
Program (OTP) and turnaround of loss-making operations
 M&A only opportunistic
2015/16:
 Growth likely to remain organic but the objective is clearly…
 …to become fit for acquisitions as suitable opportunities arise
Objective: Grow above market and improve EBIT/GP margin
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Simplified and aligned organizational structure effective Jan 1, 2014
 Responsibility for EBIT
assigned to both Regions and
Products (full matrix) down to
the business unit (BU) level
 Introduction of new growth
Region MEAC (Middle East,
Africa and CIS)
 Creation of new function
CCO (Chief Commercial
Officer)
 Elevation of CIO function to
Executive Board level
 Countries reporting directly to
Regions (Area structure
dissolved)
New function in EB / ExCom
as of Jan 1, 2014
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Management incentives based on strategy execution with bonuses
strongly linked to EBIT
Previously
New
 EBIT target linked to bonus
only for managers down to
country level
 Approx. two thirds of bonus
linked to EBIT for the vast
majority of managers
 Not all operating costs
allocated at Country and
BU level
Group
 All operating costs fully
allocated
Region
 Minimum threshold for
bonus payout stipulated,
over-achievements to be
rewarded
Country
 Share purchase plan with
restriction period
 Linear scale for bonus
payout in terms of target
achievement (0% - 100%)
 Share purchase plan with
restriction period
Business unit
 Reviewing long-term
incentives for ExCom* with
a view to use TSR** as
external benchmark
* Executive Committee
** Total Shareholder Return
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Ocean
Freight
Logistics
Delivering tailor-made
solutions
Enabling the business
transformation
Boosting productivity and
measuring success
Finance
Unlocking the full potential
Grow above
market and
improve
EBIT/GP
margin
Realizing the commercial
opportunity
IT
Leveraging a unique model
Sales
Air
Freight
Key focus areas and business priorities
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Air Freight: Leveraging a unique model
Lucas Kuehner
Global Head of Air Freight
Capital Markets Day, November 20, 2013
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Air Freight: Market overview
Global air freight market by trade lane
Global air freight market by industry vertical
Other
9%
Intra Asia
18%
Technology
21%
Perishables
14%
Other
36%
Far East WB
10%
Transpacific
EB
9%
Far East
Transatlantic
EB
Transatlantic
EB
9%
WB Transpacific
5%
WB 7%
6%
Source: Seabury Global Trade Database (2012)
Market volumes (2012):
21 million tons
Manufact.,
Oil & Gas,
Automotive
20%
Healthcare,
Chemicals
17%
Consumer &
Retail and
Fashion
19%
Source: Seabury Global Trade Database (2012)
 Asia in-/outbound due to further production shifts and growing Middle Class
 China followed by US and Germany continue to be key for growth
 Technology, Fashion and selected Manufacturing will remain key air freight growth industries
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Air Freight: Panalpina‟s relative position
Exposure by trade lane
Exposure by industry vertical
Far East WB
21%
Other 16%
Other
30%
Transatlantic
WB 15%
Southatlantic WB
Intra Asia
6%
9%
Transatlantic
Far East
EB 6%
EB
Intra Asia 9%
6%
Panalpina (2012)
Volumes: 0.8 million tons
GP: CHF 627 million
(43% of Group GP)
Oil & Gas
6%
Technology
31%
Healthcare
9%
Fashion
9%
Consumer
& Retail 5%Manufact.
8%
 Overweight on Transatlantic, underweight on Intra-Asia trade lanes
 Overweight in Technology, Automotive and Manufacturing
 Below average in Perishables as well as Consumer, Retail & Fashion
Automotive
16%
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Air Freight: SWOT analysis
Strengths
Weaknesses
 Global scale and centralized sourcing
 Processes not globally standardized
 Own-controlled network
 Underexposure on Intra-Asia and Transpacific
lanes
Opportunities
Threats
 Improve consolidation benefit on key trade lanes
 Integrators
 Increasing demand for end-to-end services
 Shifts to ocean freight
 Leverage growth in emerging markets*
 Commoditization
 Reduction of transaction costs (SAP TM etc.)
* Middle East, Africa, CIS and Latin America
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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The 4 pillars of Panalpina‟s Air Freight strategy
1
 1st leg „trunk‟ lanes Transatlantic, Transpacific, Far East, Intra-Asia
Trade lane growth,
cargo consolidation
 2nd leg „connectors‟ to Latin America, Africa, Middle East, CIS
 Focus on „good cargo‟ (mix of dense and voluminous) on consol lanes
 All Industry Verticals
2
Dual sourcing to optimize
procurement
3
 Dual sourcing and capacity management (commercial / own-controlled)
 Global centralized sourcing approach to optimize commercial procurement
 Virtual in-house carrier through ACMI* and part charter partnerships
 End-to-end offering with fee based services, e.g. customs services
Margin improvement
 Products with distinguished service level leading to price differentiation
 Logistics Value Added Services to improve customer retention
4
Deployment of SAP
Transportation
Management (TM)
 Productivity and quality improvements
 Comprehensive integration with customers and trading partners
1 + 2 = Volume growth and improved procurement
3 + 4 = Additional revenue and profit margin
* Aircraft, Crew, Maintenance and Insurance
Secure Top 5 position, turn around loss-making
operations and increase EBIT/GP margin
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Strategy execution in practice: African Star (1/3)
Trade lane growth
 Combined Air / Ocean services for oil
field equipment
 Originating worldwide into West Africa
 Primary lanes Transatlantic
Eastbound, Far East Westbound
 Secondary lane Europe-Africa southbound including vessel transportation
Houston
Aberdeen
Singapore
Luxembourg
Pointe Noire
Soyo Base
Luanda
 Fast transit time
 Competitive pricing
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Strategy execution in practice: African Star (2/3)
Dual sourcing to optimize procurement
 Exclusive use of capacity
 Own flight operations and cargo
handling
 Ability to absorb short-term spikes
 End-to-end control of cargo and
processes
Guaranteed uplifts, reliable service
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Strategy execution in practice: African Star (3/3)
Margin improvement
 Main deck capacity, dangerous goods
and out-of-gauge handling
 Dedicated Merlin 3 vessel
 In-house customs broker
 Seamless chain of custody
 Contractual compliance
 Above average margins
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Priorities 2014
 Stabilize performance
 Grow volumes above market
 Focus on profitable growth
Grow profitably and sustainably regardless of market environment
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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A Forwarder – Shipper Partnership
Panalpina Capital Markets Day
November 20, 2013
John Newcaster
© 2013 BAKER HUGHES INCORPORATED. ALL RIGHTS RESERVED. TERMS AND CONDITIONS OF USE: BY ACCEPTING THIS DOCUMENT, THE RECIPIENT AGREES THAT THE DOCUMENT TOGETHER WITH ALL INFORMATION INCLUDED THEREIN IS THE CONFIDENTIAL AND PROPRIETARY PROPERTY OF BAKER
HUGHES INCORPORATED AND INCLUDES VALUABLE TRADE SECRETS AND/OR PROPRIETARY INFORMATION OF BAKER HUGHES (COLLECTIVELY "INFORMATION"). BAKER HUGHES RETAINS ALL RIGHTS UNDER COPYRIGHT LAWS AND TRADE SECRET LAWS OF THE UNITED STATES OF AMERICA AND
OTHER COUNTRIES.
RECIPIENT
THE DOCUMENT MAY NOT BE DISTRIBUTED, TRANSMITTED, COPIED OR REPRODUCED IN WHOLE OR IN PART BY ANY MEANS, ELECTRONIC, MECHANICAL, OR OTHERWISE, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT
OF BAKER
© THE
2013
SAP FURTHER
AG. AllAGREES
rightsTHAT
reserved.
26
HUGHES, AND MAY NOT BE USED DIRECTLY OR INDIRECTLY IN ANY WAY DETRIMENTAL TO BAKER HUGHES‟ INTEREST.
Baker Hughes
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
 Formed when Baker International and Hughes Tool Company
merged in 1987
 Operates in over 90 countries across nine Regions
 NA Pressure Pumping, US Region, Canada, Latin America, Europe,
Africa, Middle East, Russia-Caspian, and Asia Pacific
 Acquired BJ Services in 2009
 Ranked 135th in Fortune 500 (2013)
 2012 revenue of $21.4B
 A top three market share participant in twelve major OFS
segments
− Pressure Pumping, Directional Drilling, Artificial Lift, Drilling & Completion
Fluids, Wire Line Logging, Completion Equipment & Services, Specialty
Chemicals, Coiled Tubing Services, Drill Bits, Logging While Drilling,
Casing & Tubing Services, Surface Data Logging
− Source: Spears Oilfield Market Report 2012
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© 2013 Baker Hughes Incorporated. All Rights Reserved.
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Supply Chain Organization
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
 Centralized in the ONE BHI Transformation of 2009
 BHI moved from 8 autonomous division structure to
Hemisphere and Region P&L‟s
 All other functions centralized and combined into Global
Products & Services (GPS)
 Supply Chain fits under GPS as a shared service
 7400 people globally located
 Logistics as part of Supply Chain is highly centralized and
highly tied to the Trade Compliance function
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© 2013 Baker Hughes Incorporated. All Rights Reserved.
28
ONE BHI Logistics Focus
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Dependability
Improving Velocity Achieving Event
Standards
Process Efficiency
Internal Overhead Required to
move goods
Cost Effectiveness
Freight as a % of COG
Total Commitment To Trade Compliance
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© 2013 Baker Hughes Incorporated. All Rights Reserved.
Commitment to Trade Compliance
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Global Supply Chain committed to
 Providing a regular & consistent message from senior
management of zero tolerance and presenting compliance as
a positive factor
 Reducing the number of processing consultants, assuring
rigorous due diligence for those retained/added, containing
selection and retention criteria
 Centralizing all customs and logistics functions globally
 Assuring that employees know their responsibilities and
assuring that specialized training programs are in place for
logistics personnel
 Developing simple and uniform customs policies/procedures
including verification and documentation of services provided
30
© 2013 Baker Hughes Incorporated. All Rights Reserved.
Logistics Provider as a Partner
 Laggards
 Mid-Tier
Leading Edge
Future State
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© 2013 Baker Hughes Incorporated. All Rights Reserved.
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Future State
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
 A provider with highly automated and transparent booking and
tracking
 When will “Sky-scanner-cargo.com” arrive? (= Trakdot.com for luggage)
 A provider with tools for the shipper to easily consolidate at origin and
deconsolidate at destination
 A provider who understands the difference between low cost and high
value where value = benefit/cost
 A provider who understand the client‟s value chain and differentiating
strategy
 A provider who understands the cargo is the life blood
 A steward of the shippers precious cargo vs. just more “weights &
dims” for revenue
 An innovation provider
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© 2013 Baker Hughes Incorporated. All Rights Reserved.
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Panalpina Capital Markets Day 2013
Panalpina Value Services to Baker Hughes
Zurich, November 20, 2013
Panalpina Own Controlled Network (OCN)
 High utilization for Baker USA exports into Panalpina LUX hub
 From LUX - distributed by truck to European destinations
 From LUX – Angola destined cargos utilize the African Star flight
 Value
Providing Baker 99.9% on-time transit KPI‟s
Freight prioritization through Panalpina internal systems
Dependability – Improving velocity and event standards
Charter and On-Board Couriers
 Panalpina operates 24x7 support desk for critical services
 Baker has utilized the charter services on numerous occasion and received
exceptional service
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© 2013 Baker Hughes Incorporated. All Rights Reserved.
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Panalpina Capital Markets Day 2013
Panalpina Value Services to Baker Hughes
Zurich, November 20, 2013
Process Improvement
 2013 Baker Hughes EDI Integration
 Panalpina USA – the selected partner to develop, test and launch
 Supported the implementation of new technology and process improvements
driving productivity gains to both organizations
 2014 – Panalpina committed to Phase II Global EDI implementation and
eBilling
Supporting Headcount Efficiency
 2012-2013 - Implant investments made in Brazil, Colombia and USA
 Q4/2013 Q1/2014 Priority - increase implant/in-house investment and scope in
USA and Latin America
Training/Learning
 Panalpina offers opportunities to Baker Hughes staff in TX and OK
 Aircraft tours, lunch and learn and INCO term training sessions
 Job Shadowing - Upcoming project where BH staff will spend time with a PA
employee for a day to understand their work and vice versa
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© 2013 Baker Hughes Incorporated. All Rights Reserved.
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Panalpina Capital Markets Day 2013
Panalpina Market Share of Baker Global Providers
Zurich, November 20, 2013
35
Market Share Percentage by Export Region & Year
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2011
2012
2013
2011
(Q1,Q2)
APCT
2012
2013
2011
(Q1,Q2)
EACT
Spend % of Market Share
35
© 2013 Baker Hughes Incorporated. All Rights Reserved.
2012
LACT
2013
2011
(Q1,Q2)
2012
2013
2011
(Q1,Q2)
MECT
Shipment Count % of Market Share
2012
NACT
2013
(Q1,Q2)
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Coffee Break –
We are back at 11.15 CET
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Ocean Freight: Unlocking the full potential
Frank Hercksen
Global Head of Ocean Freight
Capital Markets Day, November 20, 2013
37
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
38
Ocean Freight: Market overview
Global ocean freight market by trade lane
Global ocean freight market by industry vertical
Other 10%
Technology
5%
Intra Asia
27%
Other
37%
Asia to
Latam
3%
Asia to
Middle East
3%
Consumer
& Retail
27%
Perishables
7%
Market volumes (2012):
127 million TEUs
Manufact.
9%
Transpacific
EB
10%
Far East WB
Trans9%
Far Eastpacific WB
6%
EB
5%
Source: Seabury Global Trade Database (2012)
Chemicals
21%
Automotive
10%
Fashion
11%
Source: Seabury Global Trade Database (2012)
 Continuation of current growth environment with above market growth expected in emerging
markets
 Overcapacity and market uncertainty is driving significant rate volatility in all major trade lanes
 Shippers are aiming for carrier portfolio diversification, market share gains for forwarders
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
39
Ocean Freight: Panalpina‟s relative position
Exposure by trade lane
Other
30%
Exposure by industry vertical
Consumer
& Retail
23%
Far East WB
21%
Other 37%
Transpacific
EB 11%
Transatlantic
EB 6%
Far East
EB
Transpacific
Transatlantic
9%
WB 7%
WB 7%
Intra Asia
9%
Panalpina (2012)
Volumes: 1.4 million TEUs
GP: CHF 460 million
(31% of Group GP)
Fashion
5%
Automotive
11%
Oil & Gas
3%
Manufact.
Healthcare
8%
4% Technology
10%
 Maintain balanced portfolio in key industry sectors Consumer & Retail, Technology and
Automotive
 Leverage profitable growth opportunities in Oil & Gas as well as the Healthcare industry
 Further reduce dependency on Europe related trade lanes
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Ocean Freight: SWOT analysis
Strengths
Weaknesses
 Global scale
 Inconsistent level of process standardization
leading to low productivity and EBIT/GP margin
 Trade lane and commodity focus
 LCL network
 Exposure to Europe related trade lanes
Opportunities
Threats
 Attract large customers
 Macroeconomic weakness in „old economies‟
 Revenue stream through Managed Solutions
 SAP TM based productivity improvements
 Optimization of operational processes
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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The 4 pillars of Panalpina‟s Ocean Freight strategy
1
 Asia outbound: Intra-Asia, FEWB, TPEB, Asia-Latam, Asia-Middle East
5 strategic trade lanes
(for FCL and LCL)
 Headhaul lanes
 Transactional business (average margins)
 All Industry Verticals
2
 Backhaul lanes, opportunity for intermodal activities
Backhaul lanes
 Secondary Recycled Materials (FEEB & TPWB) and Forestry (global)
 Specialized low-margin / high-volume business
3
 Order Management: support import customers on strategic trade lanes
Managed Solutions
 Freight Management: global visibility for export customers
 Additional revenue streams through management and service fees
4
Deployment of SAP
Transportation
Management (TM)
 Productivity and quality improvements
 Comprehensive integration with customers and trading partners
1 + 2 = Volume growth and improved procurement
3 + 4 = Additional revenue and profit margin
Secure Top 5 position, turn around loss-making
operations and increase EBIT/GP margin
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
42
Strategy execution in practice: Growth focus – FCL
Profitable, above market growth
 Attract large customers
− Share of 5‟000+ TEU customers increasing
− Less exposure to market rate volatility
− Improving operational efficiency
Panalpina vs. market volume growth (YoY)
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
13%14%
2009
− Flexibility to manage constant geographic
shifts in customers‟ business
 Healthcare
− Modal shift within customer portfolio
2010
2011
2012
Panalpina
− Reduce exposure to European trade lanes
 Oil & Gas
6%
3%
7%
3%
-10%
-14%
 Focus on emerging market trade lanes
− Increasing demand for Order Mgmt solutions
6% 6%
2013
YTD Sep.
Market
Panalpina GP growth (YoY)
10%
5%
0%
-5%
-10%
-15%
-20%
5%
-1%
-18%
2009
2010
7%
-3%
2011
Panalpina
2012
2013
YTD Sep.
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
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Strategy execution in practice: Growth focus – LCL
LCL – GP per unit development (indexed)
Continuous expansion of LCL network
 LCL as gross profit driver
− Access pre- and post-ocean revenue streams
− 14% of files, 22% of GP
− Less exposure to market rate volatility
 Owned services as productivity driver
− Standardized structures and processes
− Tailor-made infrastructure
LCL - Panalpina weekly owned & direct services
> 500
500
 Customers
> 450
> 400
400
> 350
> 300
− Seeking for global coverage and consistency
300
− Cross-selling opportunities with Air Freight
200
100
0
2010
2011
2012
2013
2014
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Priorities 2014
 Continue above market growth by extending service offering
 Maintain GP per unit yields
 Improve productivity and EBIT/GP margin
Continue growth, extend service offering and increase productivity
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Logistics: Delivering tailor-made solutions
Mike Wilson
Global Head of Logistics
Capital Markets Day, November 20, 2013
45
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Logistics embedded in the Panalpina strategy
To (future status):
From (current status):
 Profitable (positive EBIT)
Subsegment GP in % of Logistics GP
Jan-Sep 2013
 Customer-focused E2E
solutions
 Selected customers
Other*
37%
Standard W&D
28%
Value Added
Services
13%
Overland
22%
* Transit warehousing, Customs clearance, Other
Logistics
Panalpina (2012)
GP: CHF 378 million
(26% of Group GP)
 Focus on Value Added
Services
46
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Logistics: SWOT analysis
Strengths
Weaknesses
 Excellent operational showcases
 Very strong customer base
 No product or geographical silos
 Non-strategic legacy business
 Financial performance
Opportunities
Threats
 Increased cross-product and cross-geography
selling / E2E solutions
 Build on existing Fashion, Technology and Oil &
Gas capabilities
 Roll-out of integrated systems to improve
productivity and service offering
 Sales execution of Value Added Services
 Duration of lease contracts
47
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
48
The 4 pillars of Panalpina‟s Logistics strategy
1
Selective offering –
Value Added Services
2
Focused business
development
 Focus: Logistics manufacturing services, Finished goods and Aftermarket
 No standard warehousing; distribution and overland only around solutions
 Multi-user facilities in strategic locations; single-user only if back-to-back
 Target: existing int‟l Air and Ocean accounts (E2E offering, customer retention)
and new accounts with potential for int‟l Air and Ocean (door opener)
 Focus: Technology, Fashion and Oil & Gas Verticals
 Dedicated Logistics business development team
3
Continuous improvement
(LogEx)
4
Best-in-class IT platform
 Focus: develop training and tools to support local teams in driving their own
continuous improvement plans (vs. large central team of specialists)
 Objective: best-in-class operations, free-up capacity, increase productivity and
improve customer service level
 Red Prairie replaces all legacy WMS platforms globally
 Benefits: operational efficiency improvements and cost reduction
1 + 2 = E2E offering and customer retention
3 + 4 = Productivity and margin increase
Turn around loss-making operations
for sustainable EBIT
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Strategy execution in practice: Service offering
Service offering: refined to focus on LMS, Finished goods and Aftermarket services
VALUE ADDED SOLUTIONS ACROSS THE SUPPLY CHAIN
LOGISTICS
MANUFACTURING
SERVICES
FINISHED GOODS
SERVICES
AFTER MARKET
SERVICES
 Inbound to manufacturing
 Kitting & Packing
 Return & repair
 Final assembly configuration
and testing
 E-Fulfillment
 Exchange Logistics
 Multi channel dispositioning
 Disposal
 Line side feeding
 Transformational cross-docking
 Dispositioning
 Postponement
 Post production consolidation
 Vendor managed inventory
 Apparel finishing services
 Advanced inventory planning
SUPPLIERS
SOURCE
MAKE
DELIVER
END USERS
Service offering: what we are NOT going to do
 Standard warehousing (big box)
 Become landlords
 Pure consultancy
 Develop an overland network
RETURN
49
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
50
Strategy execution in practice: Logistics Manufacturing Services
Assembly Area
Boards update
 Outsourcing of selected manufacturing
steps by an Asian telecom company
 Panalpina manages the light assembly of
semi-knocked down units for base stations
Cabinet – BTS Assembly
Board – BBU Assembly
System update
control - BBU
 Panalpina not only executes the final
assembly, but takes full ownership of the
whole process – from planning to quality
control
 It is the first time that a telecom company
has outsourced a part of its manufacturing
process to a Logistics Service Provider
 This new model combining logistics and
manufacturing services is developed by
Panalpina and named LMS (Logistics
Manufacturing Services)
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Priorities 2014
 Turn around Top 10 loss-making facilities
 Exit capacity commitments in overland
 Grow Value Added Services
 Reduce EBIT loss
Increase focus on cross-selling Value Added Services and improve
bottom line
51
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Realizing the commercial opportunity
Karl Weyeneth
Chief Operating Officer (as of Jan. 1, 2014: Chief Commercial Officer)
Capital Markets Day, November 20, 2013
52
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
53
All key pillars of Panalpina‟s Sales organization are in place –
some gaps must be addressed to realize the opportunity
Company
strategy
Defined
Products
Sales
structure
Sales
channels
Sales tools &
transparency
Successful execution of
product strategy
GAPS:
Allocation of Sales
resources
Sales performance
management
Sales pipeline
Global Sales
Incentive Plan
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Sales: SWOT analysis
Strengths
Weaknesses
 Excellent blue chip customer base
 Sales performance management
 Ability to design tailor-made Supply Chain solutions
that unlock value
 Global Sales Incentive Plan not harmonized
 Industry Vertical know-how and setup
Opportunities
Threats
 Focus on selling end-to-end solutions and
Logistics Value Added Services
 Value selling difficult in current economic
environment
 Leverage new visibility and sales management
tools
 High customer service expectation at low cost
 Systematic cross-selling of Ocean Freight and
Logistics with Air Freight customer base
 Commoditization
54
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
55
Sales: Focus on 4 key drivers to realize the commercial opportunity
1
Allocation of Sales
resources
2
Sales performance
management
3
Sales pipeline
4
Global Sales Incentive
Plan
Re-balance Sales resources within 2013 cost level to achieve a
balanced customer portfolio (Industry Verticals and account size)
and increase Return on Sales Investments (ROSI)
Regular tracking of sales performance to enable the retention of
sales talents and mitigation of underperformance
Measurement and enforcement of proper pipeline creation and
maintenance throughout the entire organization in line with Product
strategies
Implementation of Global Sales Incentive Plan with consistent global
KPI‟s to ensure highest effectiveness
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
56
While keeping Sales force costs at 2013 level, re-balancing of
Sales resources will increase Return on Sales Investments
Proportionality Return vs. Invest
Comments
 Measure and take steps to ensure highest
ROSI* in each Sales channel
 Process to re-balance sales resources across
Industry Verticals has been initiated and is
expected to yield results in 2014
 Allocate future sales resources based on
highest return in alignment with Product
strategy, as well as defined criteria at
Regional, Country or Business Unit level
Maximize Return on Sales Investment
* ROSI measured as GP increase divided by sales cost
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Sales tools and visibility in place to manage Sales performance
Measurement per Sales person
Targets
 KPI targets
 Target accounts
Pipeline
 Open, won and lost
opportunities
Performance
 Customer base
 Actuals
CRM
Reporting
Personal targets
and target lists are
entered in the
system
Management has
visibility on targets
and achievement
Sales person edits
and tracks his/her
opportunities
Visibility of individual
and aggregated
pipeline
Sales person
maintains the
customer portfolio
and generates
actuals
Actual performance
is tracked by
management
Track Sales performance and address underperformance
57
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Industry Vertical focus paying off – delivers approx. 80% of our
global revenues
Grow
Leverage
Oil & Gas
 Unique solutions and expertise
 High demand for E2E solutions
 Above average margins
Technology
 High volumes in major trade lanes
 Strong focus on emerging markets
 Proven solutions across all Products
Healthcare
 E2E temperature control solutions
 Resilience to volatility
 Above average margins
Automotive
 High after-market demand
 Strong focus on emerging markets
 High demand for E2E solutions
Consumer & Retail and Fashion
 High Ocean Freight share
 Cross-selling opportunities
 Order Management solutions
Manufacturing
 Strong focus on emerging markets
 Cross-selling opportunities
 Order Management solutions
Strong focus on Industry Vertical Sales to drive growth
58
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
59
Strategy execution in practice: End-to-end solution in Asia reduces
supply chain costs by 13%
Optimized network flows
Baseline flows
Evaluation parameters
Final single hub scenario
Results
Panalpina runs E2E solution incl. in-/outbound freight and warehousing for an int‟l Consumer & Retail customer
 Volumes of approx. 5‟000 TEU annually are bundled for highly consolidated weekly deliveries to Australian
distribution centers
 Cost savings through reduced warehousing cost in Asia and avoidance of costly transportation within Australia
 8‟000 sqm off-shore warehouse with full customer integration via EDI
Neutral network optimization solution independent of warehouse footprint
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Priorities 2014
 Re-balancing of Sales resources to increase ROSI
 Implementation of consistent Sales performance and Sales
incentive KPI‟s by Sales channel
 GP, GP growth, volume, DSO
 Execution of Sales performance management via new
organizational structure
Be the most customer focused global provider of freight forwarding and
logistics solutions with a balanced mix of Products, IV‟s and customers
60
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Lunch Break –
We are back at 14.00 CET
61
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
IT: Enabling the business transformation
Rod Angwin
Chief Information Officer
Capital Markets Day, November 20, 2013
62
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
63
IT supports the business strategy and is a key differentiator
Panalpina’s IT is strategically aligned with core business plans for
 Above market sales growth
 Improvement of EBIT/GP margin
Main IT-supported levers
Customer-facing systems
Internal productivity
 Providing industry-leading visibility (e.g.
cargo flows, documentation)
 Implementing industrial strength
transaction engine – SAP TM
 Offering best-in-class Order
Management Solutions (myPanalpina+)
 Digitalizing information and processes
 Radically simplifying IT landscape
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
64
The current set-up is too complex
GWH
TAGETIK
Manhattan
Warehouse
Red PrairieSAP DWMS
systems
(20)
IPAWS
…
Intrac
AXIT
GT-Nexus
Customer
combas.net
Log-Net
systems
(6)
SCA
…
SAP Treasury
X-rates
SCP
Integration
Shipping data
platform
SAP PI
Shipping data
milestones
IHT
e-File
IDS
SAP TM
FI FOS
Interface
Pantrace
Visibility
Air/Ocean
SAP ACR
Finance
Data
Shipping data
milestones
Interface
SAP CRM
SAP BW
CTS
LBase
AW
AE FOS
Transport
management
SW LCL
TOMsystems
EF FOSEF FOS
SW FCL
AirFI/ FOS
Ocean / Overland
Cargo Point
FI FOS
AMS (US
Ex) (US Ex)
AMS
GFX
Rate portal
Global codes
Global guidelines
Global standards
Processes, SOPs
Integrated Management System
Panalpina’s legacy Information Technology landscape is limited by:
 Significant architectural complexity
 Old technology and legacy systems
 Duplication of data and data entry
 Limited structural discipline
 Panalpina-centric view of our core business
 Insufficient scalability of systems
Leading to significant challenges in data quality
Global basic data
SAP FI/CO
Finance
SAP FI/CO
SAP FI/CO
systems
SAP FI/CO
WIS
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Towards a simplified IT architecture
Flexible customer supply chain & logistics solutions
Customer applications
Warehouse systems
Visibility
Industrial strength SAP core foundation systems
Human
Resources
Accounting
& Finance
Transport
Management
Customer
Relationship
Management
Business
Intelligence
Integrated SAP forwarding system
Integration platform
Principles underpinning the IT transformation:
 Radical simplification
 Ease of integration
 Off-the-shelf solutions
 Built-in integrity
 Configured for our business
 Inherent data quality
65
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Customer-facing systems to support business growth
 Modular „IT product‟
portfolio to deliver
strategic Supply
Chain platforms
myPanalpina+
myPanalpina
 myPanalpina (inhouse development)
 myPanalpina+
(powered by LogNet)
 Customer dashboard
to enhance performance monitoring
Scaling service levels, designed to meet
differing requirements
66
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
67
Operations Transformation Program as a driver of productivity
Transport Management
Systems: Today
 Legacy operations
landscape with limited
integration possibilities
 Low automation and
centralization (business
processes)
 Multiple data entry
 No standard quotation and
tariff system for buying and
selling rates
 Limited business
scalability
Operations
Transformation
Roadmap
 Global Business Services
 SAP Transportation
Management (TM)
 SAP TM related projects
− rate standardization program
− event management
− customs brokerage
connectivity
− etc.
Future
“Forwarding Factory”
 Standardized business
processes
 Integrated operations
application landscape with
enhanced functionalities
 Operations consolidation
− Optimized business services
− Shared Service Centers
 Improved operational
efficiency / data quality
 Reduced and more transparent operational costs
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Roll-out of SAP TM: Full implementation scheduled for 2016
Current status (Q4 2013)
 Ocean Freight export/import live
in 6 countries
 800+ users
 15% of total global Ocean
Freight volume
 All roll-out milestones achieved
as planned
SAP TM
Air & Ocean
Other countries
SAP TM
Air Freight
First Pilot
Fully implemented
SAP TM
Export & Import
Air & Ocean
SAP TM
Ocean Freight
Export & Import
First Wave Countries
SAP TM
SAP TM
Ocean Freight Project scope
Pilot Singapore enhancement
Roll-out
milestones
Q3 2012
Q2 2013
SAP TM
Ocean Freight
Export & Import
Next Wave Countries
Q2 2014
SAP TM
Air Freight
Export & Import
Countries Live with Ocean
2015
2016
68
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Roll-out of SAP TM: Expected benefits vs. costs
P&L impact of SAP TM project
 2014 (estimated): Operating expenses / amortization charges increase by
approx. CHF 20 million / CHF 10 million, respectively, over 2013
 2015 (estimated): Operating expenses stable / amortization charges
increase by approx. CHF 3 million over 2014
 Project costs peak in 2015 and drop significantly thereafter
 Amortization of capitalized costs over period of 5 years
 Main productivity benefits expected to kick in after mass roll-out in 2016
(potential productivity increase >10%)
69
Panalpina Capital Markets Day 2013
The Role of IT in Supporting Panalpina's
Business Transformation
Zurich, November 20, 2013
70
Franz Hero, Senior Vice President & Head of SAP Supply Chain Execution Development, SAP AG
Panalpina Capital Markets Day
November 20th, 2013
© 2013 SAP AG. All rights reserved.
70
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Standard Enterprise Software - Helping Companies Run Better
The Move to Standard, Harmonized Systems & Business Processes
Global
Best Practice
Integrated
Proven
Flexible
Scaleable
Compliant
……, Sports & Entertainment
Logistic Serv. Providers
Public Sector
Telco
Banking, Insurance
EFFICIENCY
Standard Software Adoption
(an LSP pioneer)
Professional Services
PROFITABILITY
Retail, Wholesale
Automotive, Mining
TCO
Utilities
RISK
High Tech, Aerospace, Industrial Machinery
Oil & Gas, Consumer Products, Life Science, Mill
Chemicals
1990
1995
2000
2010
2015
Main Industry Adoption Wave
© 2013 SAP AG. All rights reserved.
71
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
72
….Supporting Industry-Specific Needs & Challenges
!
Service Differentiation
Operational Excellence / Productivity
Margins / Profitability
Global Logistics Networks
Regulatory Compliance
Green Logistics
!
Logistic Service Providers
Consignee
Logistics planning, orchestration,
execution, & tracking
Vendor
Carriers
© 2013 SAP AG. All rights reserved.
Customs
72
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
73
Strong Partnership, Collaboration & Co-Innovation
Flexible customer supply chain & logistics solutions
Customer applications
Warehouse systems
Visibility
Industrial strength SAP core foundation systems
Human
Resources
Accounting
& Finance
Transport
Management
Customer
Relationship
Management
Business
Intelligence
Integrated SAP forwarding system
Integration platform
© 2013 SAP AG. All rights reserved.
73
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
74
Together Redefining & Transforming Transportation Mgmt.
New Generation Transportation Management for LSP's
Strategic freight selling
& procurement mgmt.
Efficient forwarding order
& cargo management
LSP-specific freight
tariff, tax & charge mgmt.
Advanced network &
capacity management
Full freight documentation
(customs, security, DGs)
World class reporting
& analytics
All mode freight mgmt.
(ocean, air, truck, rail)
End-to-end execution
monitoring & event mgmt.
Flexibility, simplicity
& performance
© 2013 SAP AG. All rights reserved.
74
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Flexible, End-to-End Freight Planning, Routing, Execution
Complete, Multi-mode, Multi-stage Freight Management
Airport / Port / Station
of Destination
Port/Station/Airport
of Departure
Linehaul
Main Carriage
Consignee
Shipper
Pickups
Station of Origin
Container Freight Station /
Export Gateway / Yard
Container Freight Station /
Import Gateway / Yard
Integrated selling, pricing, planning, orchestration, execution,
tracking, and invoicing of freight & cargo services
© 2013 SAP AG. All rights reserved.
75
75
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
76
Next Generation Transportation Management
Comprehensive, End-to-end Order Mgmt.
Powerful Network & Freight Planning Tools
Efficient Freight Execution Mgmt. & Tracking
World-class Analytics and Reporting
© 2013 SAP AG. All rights reserved.
76
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Customer Benefits with SAP Transportation Management
Superior Service Performance
•
•
Timely & efficient freight management
Global, standard product & service offering
Reduced Costs / Higher Margins
•
•
•
•
Improved capacity / resource utilization
Enhanced product / service pricing
Efficient carrier / provider negotiation
Accurate freight settlement
Efficient & Compliant Operations
• Automated, integrated processes
• Full process, shipment, event auditability
• Global, end-to-end visibilty
Lower TCO / Higher ROI
• Holistic, integrated system
• Flexibility & scaleability
© 2013 SAP AG. All rights reserved.
77
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
78
Continuous Innovation….Future Investment Focus
Advanced Automation
Real-time
Analysis & Simulation
Verticalization &
Integration
Logistic Service Providers
Consignee
Vendor
Real-time, Integrated, Connected
Supply Chain Execution
Carriers
Global Business Network
Connectivity & Collaboration
© 2013 SAP AG. All rights reserved.
Customs
Customer-centric Design
& User Experience
SaaS & Implementation
Accelerators
78
Panalpina Capital Markets Day 2013
Summary
Zurich, November 20, 2013
79
• Transportation and logistics and the logistics service provider
industry are a strategic & major investment area for SAP
• Our goal and mission is to help companies Run Better with more
profitable, efficient & sustainable business
• To this end, SAP is working in close collaboration with Panalpina
& other leading customers for customer-centric development
• Together we can ensure strong industry focus and a
world-leading solution
• And together we can profit from the solid, growing market
momentum
© 2013 SAP AG. All rights reserved.
79
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
80
Thank you
Franz Hero
Head of Supply Chain
Execution Development
Dietmar-Hopp-Allee 16
69190 Walldorf
T +49/6227/60039
franz.hero@sap.com
© 2013 SAP AG. All rights reserved.
80
Panalpina Capital Markets Day 2013
© 2013 SAP AG. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose
without the express permission of SAP AG. The information contained herein may be
changed without prior notice.
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are trademarks or registered trademarks of Citrix Systems Inc.
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81
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Priorities 2014
 Run pilot of Air Freight module of SAP TM
 Continue roll-out of Ocean Freight module of SAP TM and
prepare for volume ramp-up
 Deliver myPanalpina+ and deploy customer dashboard
Simplify the IT landscape, implement customer-facing systems and
facilitate the industrialization of business processes
82
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Finance: Boosting productivity and measuring success
Robert Erni
Chief Financial Officer
Capital Markets Day, November 20, 2013
83
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
84
Where do we come from
Limited financial transparency down to the smallest unit
 Focus on EBITDA, not fully loaded (i.e. substantial part of
operating expenses unassigned)
 Information not cascaded down to all levels of the
organization, focus on Area rather than Country level
 Multiple accounting systems
 Very limited near-term visibility
P&L accountability not fully aligned with incentives
 Ownership of local P&L only partially linked to compensation
 No minimum threshold for bonuses, no incentive to overachieve budget
Key issues
 Low EBIT/GP margin
 High number of lossmaking operations
 Productivity* lagging
behind best practice by
up to 20%
* Productivity measured as shipments per FTE
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
85
EBIT/GP margin trend since 2007
35%
EBIT/GP in %
30%
25%
PWTN
KNIN
EXPD
DHL GF
DSV
UTIW
20%
15%
10%
5%
0%
2007
2008
2009
2010
2011
2012
H1 2013
 Panalpina with strong decline of EBIT/GP margin since 2007 – recently positive trend
 Majority of peer group with fairly stable margin development – „maxed out‟?
Note: EBIT adjusted for extraordinary items
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
86
Full transparency pushed through to all levels of the organization,
enabling managers to take the right decisions
GROUP RESULT
GROUP RESULT
 Breakdown of results per Product into
smallest organizational units, Finance
organization fine-tuned accordingly
 Full matrix in place, focus from two sides
down to lowest level (e.g. department)
Hierarchy
Ocean
Freight
Group GP
Proj./O&G
Pers. Ex. in
APAC
Air Freight
Other Opex
in Germany
 All costs allocated down to EBIT – public
disclosure of EBIT per Product is planned
together with the release of FY 2013
results (March 5, 2014)
 Clear ownership assigned and directly
linked to compensation
− EBIT as the relevant measure
Logistics
EBIT in
Toronto
Product
− Minimum result required, over-achievement
is rewarded
 Monthly rolling forecast to increase nearterm visibility and increase reaction time
Panalpina Capital Markets Day 2013
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Alongside the roll-out of SAP TM, setting up GBS is the other
cornerstone to take productivity to the next level
SAP Transportation
Management (TM)
Global Business Services
(GBS)
Operations Transformation
Program (OTP)
4 business service centers on
3 continents – 2 pilots already live
Scope
Global / all non customer-facing processes
– initial focus is on Ocean Freight
Cost efficiency/
labor arbitrage
Drive down operational cost for operative
processes while maintaining service levels
Best in class
quality
Ensure consistent quality as well as reliable
and highly responsive service delivery
Continuous
Improvement
Drive continuous improvement of processes
to ensure reliable global delivery
Standardization
and compliance
Enforce a high degree of transparency as
well as compliant processes
Panalpina Capital Markets Day 2013
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The opportunity is a clear self-help story
Main levers to improve
profitability and margins
TIMELINE
IMPACT STATUS REMEDY
ISSUE
Underperforming
operations
Productivity*
Labor arbitrage (GBS)
Return on sales
 Various loss-making
operations
 Productivity gaps due
to low standardization,
mainly Ocean Freight
 Many non customerfacing processes in
high-income countries
 Return on Sales
Investments (ROSI)
 Turnaround plans in
place, mthly tracking
 Roll-out of SAP TM
 Set-up of 4 business
service centers
 Definition of KPI‟s to
measure ROSI
 Prioritization according to 80/20 rule
 Implementation started
in 2013
 2 pilots already live
(Prague, Wuhan)
 Reports in place,
monthly tracking
 EBIT potential of min.
CHF 50 million
 Potential productivity
increase >10%
 20% of Air/Ocean
FTEs moved to GBS;
productivity gains
 Increase in gross profit
 By end of 2015
 By end of 2016
 By end of 2018
 Throughout 2014
 Goal: stabilization of performance in Air Freight, profitable growth in Ocean Freight and Logistics
 Substantial margin improvements expected regardless of market environment
* Productivity measured as shipments per FTE
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Financial targets (mid-term)
 Above market growth
Profitable growth
 Improvement of EBIT/GP margin
 Disclosure of EBIT per Product*
Net working
capital (NWC)
Capex
Tax rate
 Keep NWC intensity below 3%
 Approximately CHF 50 million per annum
 Approximately 25%
 Depending on profit contribution per country
* Public disclosure of EBIT per Product is planned together with the release of FY 2013 results on March 5, 2014.
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Balance sheet structure and cash policy
 Current: pay out 30-40% of reported net earnings
Dividend policy
M&A strategy
 2012 as an exception: dividend of CHF 2 per share despite
reported net loss
 Near-term focus on strategy execution, Operations Transformation Program and turnaround of loss-making operations
 Mid-term: become fit for M&A to realize economies of scale
Balance sheet
structure
 Maintain cash buffer for the time being
 Structure will be addressed once earnings are more stable
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Priorities 2014
 Continuously improve financial transparency
 Support turnaround of loss-making operations
 Focus on cash generation
Provide transparency down to lowest organizational unit and drive
business performance improvements
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Q&A
92
Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
Panalpina Group
November 20, 2013
Thank you!
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Panalpina Capital Markets Day 2013
Zurich, November 20, 2013
94
Disclaimer
Investing in the shares of Panalpina World Transport Holding Ltd involves risks. Prospective investors are strongly requested to
consult their investment advisors and tax advisors prior to investing in shares of Panalpina World Transport Holding Ltd.
This document contains forward-looking statements which involve risks and uncertainties. These statements may be identified by
such words as “may”, “plans”, “expects”, “believes” and similar expressions, or by their context. These statements are made on the
basis of current knowledge and assumptions. Various factors could cause actual future results, performance or events to differ
materially from those described in these statements. No obligation is assumed to update any forward-looking statements. Potential
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pricing pressures and regulatory developments.
The information contained in this document has not been independently verified and no representation or warranty, express or
implied, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or
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condensed, and it may not contain all material information concerning the Panalpina Group. None of Panalpina World Transport
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