CEVA Holdings, one of the world’s leading non‐asset based supply chain management companies, has reported a 5.4% increase in annual revenue to $7bn (£5bn) full year and fourth quarter of the year ended 31 December 2017.
Full-year operating cash flow of $209m, up $66m vs. previous year. Adjusted EBITDA was $280m for the full year, up $31m in constant currency, registering a good fourth quarter with strong growth and improved profits. Its Excellence Program is rigurously executed and has delivered more than $120m in annualised cost savings, and a robust liquidity position with headroom of $578m at year end.
“I am pleased to report a strong finish to a good year” says Xavier Urbain, CEO of CEVA. “Our Excellence Program has delivered important cost savings and has supported much better profits despite market headwinds. At the same time, revenue growth across Contract Logistics and Freight Management has been very good. With stronger revenue, profits and cash flow, we have delivered on all our objectives.”
CEVA's competitive position has much improved as evidenced by the important business wins we have had in recent months. Through the transformation we have initiated in 2014, CEVA is a much stronger company now. However, we still have ample opportunities to improve margins and deliver even better service to our clients – this is what we are working on.”
“I am confident that we can keep the momentum and can continue to improve our results going forward”.
In Q4, the peak season once again was challenging with tight capacity in airfreight, notably on the China-US routes. Air freight volumes in 2017 were up 11.6% year on year with particularly strong Q4 performance on transpacific trade lanes. CEVA also maintained solid yields with yields up 8.5% versus prior year in Q4 due to pricing and procurement measures.
Ocean freight also had a good Q4 with volumes up 6.9% year-on-year.
The Excellence Program has resulted in important process and cost improvements; productivity was up 12.9% in ocean freight. Additional process automation is expected to drive further productivity improvements.
Overall, freight management revenue was $3.3bn in 2017, up 8.6% in constant currency, whilst net revenue was $875m, stable versus last year. Cost savings allowed us to offset the temporary net revenue margin pressure from rate increases. As such, EBITDA was $76m, up $13m in constant currency.
Revenue growth was 2.8% in constant currency and accelerated vs prior years. Contract Logistics had a number of important business wins in recent months which, once implemented, are expected to support the growth in 2018. "We experienced strong customer traction in a number of verticals, notably consumer & retail including e-commerce, industrials and automotive," said the company.
EBITDA for the full year stood at $154m, up $9m in constant currency. Normalised for property disposals in 2016, the underlying improvement is $25m which reflects the focus on productivity improvement in key contracts through the Excellence Program.
Revenue in Q4 was $1,89bn, up 5.7% in constant currency vs prior year, the fifth consecutive quarter of strong growth. Full year revenue was $6,994 million, up 5.4% in constant currency.
Adjusted EBITDA was $71m in Q4 and $280 million for the full year, up $31m in constant currency. The underlying profitability improvement was even stronger but partially offset by the temporary margin pressure from market conditions in freight management and the increase in variable compensation related to the good performance in the year.
Operating cash flow in 2017 was $209m, up $66m from the prior year, reflecting better profits and working capital inflows from stronger focus and ongoing initiatives.
Headroom from cash and cash equivalents and committed facilities as of 31 December 2017 was $578m.