05-27-2010 Heppner withstands the crisis and keeps intact its capacity to rebound

At the end of a year marked by an economic crisis without precedent Heppner, the leading independent Transport and Logistics company in France, posted a turnover of €477 million, down 13.2%, an operating profit of €2 million and a virtually unchanged net profit despite the non-recurring expenses that weighed heavily on the fiscal year. This performance was obtained due to the diversity of the company’s activities and the reactivity of the teams when it came to quickly adapting to the volumes available in the market. In such a context Heppner is weathering the recession unscathed and capitalizing on its assets: a sound transport agent ethos, streamline handling of the supply chain, a diversified client portfolio and solid financial footing.
 
 
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Key figures for 2009
·         Consolidated turnover: €477 million (- 13.2%)
·         Operating profit: €2 million (- 59%)
·          Non-recurring expenses: €2.7million
·         Net income: €-0.3 million compared to €3.1million in 2008 ·        
.         Cash flow: €5.3million (-45%)
 
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Statement of Account by activity
 
France Groupage
Turnover: €182million (- 3%)
 
Groupage is one of the activities the hardest hit, with a 13% decrease in turnover resulting from a decrease in volumes, worsened by strong downward pressure on prices and the reduction of the fuel surcharge in the wake of the drop in carburant prices.
 
The current profitability of this industrial activity entailing significant fixed costs was maintained thanks to measures set up as far back as 2008. These principally concerned transport plans (massification via platforms), optimizing the means of distribution, pooling the means with professional colleagues in those economic zones with low potential and, more generally speaking, variabilizing costs.
 
France Full and Part Loads
Turnover: €70.8 million (-5.7%)
 
This activity best withstood the drop in volumes owing to the reactivity of the teams and their ability to respond swiftly to a volatile market. During the first six months of 2009 the reduction in traffic led to a decrease in prices as well as a contraction and an adjustment of the offer. When business picked up starting forth quarter found, the activity found itself confronted with a shortage of means and a lot of tension on transport purchasing prices.
 
Europe Ground
Turnover: €126 million (-12.6%)
 
Extremely impacted at the beginning of 2009 with volumes falling more than 20% and particularly in Germany, this activity showed signs of better health as the year progressed and notably the forth quarter thanks to some successful contract wins. In conformance with the strategic objective to develop its presence over the French territory, Heppner continued to set up new international services in several cities: Annecy, Dax, Laval, Nantes, Saint-Etienne and Tours. Likewise in outlying Paris, the Rungis (94) national agency was assigned an international team to complete that in Gonesse (95) in order to expand the market share of the group south of the Ile-de-France.
 
These investments help reinforce Heppner’s presence among exporters and importers and comfort Heppner’s position in France as a major operator vis-à-vis its international partners within the System Alliance Europe network. The new locations set up over the past years have accelerated the growth of European ground transport and represented 11% of the turnover of the activity in 2009.
 
Freight Forwarding
Turnover: €41 million (-30%)
Gross Margin: -11%
 
This activity faced a steep drop in volumes, particularly air transport, and exceptional volatility in freight rates that reached historic low levels in maritime transport in 2009.
 
Freight forwarding is a strategic activity for the international development of the company and a natural extension of its Europe ground activities. The teams were strengthened and continue to be so in order to fully exploit the potential that Heppner’s exclusive partners offer, coverage of 134 countries and being particularly well represented in China and the Middle East.
 
In this uncertain international environment inciting EU member States to heighten the security of their international logistics chain, Heppner took an important step forward by obtaining the full grade Authorized Economic Operator status, the equivalent of the AEO Customs Simplifications / Security and Safety certificate, for all its agencies and activities.
 
Logistics
Turnover: €58 million (-8.8%)
 
The drastic stock reduction measures taken starting late 2008/early 2009 had a particularly adverse effect on logistics. However this was somewhat offset by new opportunities in Lille, Lyon as well as in Toulouse and La Roche-sur-Yon.
 
Concerning traditional logistics services such as warehousing and stock management, the combination of our know-how in Europe and in international freight forwarding afforded us the occasion to develop new cross-docking services that respond to a desire to reduce stocks by using very dynamic supply procedures. At the same time, to satisfy the more and more demanding needs of clients, Heppner is developing an expertise in industrial packaging, exceptional transport and port logistics.
 
2010… in the short term
 
As a consequence of the first signs of a rebound in economic activity at the end of 2009, first quarter 2010 revenues rose nearly 6% year-on-year, mainly owing to an exceptional March. Still business was sluggish compared to first quarter 2008. The economic situation is thus unpredictable. Seeing as GNP is expected to grow at a rate inferior to 1% in the euro zone, the group is keeping a conservative and opportunistic management approach on the national front and continuing to invest at the international level in order to benefit, both directly and indirectly, from the growth in international commerce, particularly in emerging countries.
 
The upcoming period is marked by strong pressure on selling prices and an increase in the costs of purchasing transport. Despite the difficulty of making forecasts in the current environment, Heppner is targeting positive growth as well as an improvement in earnings, thanks to the carrying forward effect of measures commenced in 2009.
 
In the longer term
 
Heppner continues to invest.
 
Ø      Real Estate
 
After construction of the new Saint-Priest 18,000 sq m installation in greater Lyon in 2009 (€10m investment) and the new 14,700 sq m SEVESO warehouse at Grenay (€10m investment), Heppner is inaugurating a new 2,500 sq m site in Grenoble in June 2010 (€3m investment) and starting construction of a new 4,500 sq m agency in Metz, scheduled to open in January 2011 (€5m investment). These latter two buildings are being financed by equity capital.
 
 
Ø      Technological innovations
 
The group is continuing to invest in new technologies, among others:
-          The rollout of its new Internet Port@il portal, part of its comprehensive offer allowing clients to track their orders and shipments.
-          The on-board IT “Mercure” project (budget €5m) affording clients access to real-time and more precise and rapid information on consignments up to the final consignee.
-          The modernization of its decision-support tool (DECISIO project), enhanced with a “business intelligence” solution.
 
Ø      Sustainable Growth
 
Cognizant of the importance of protecting the environment, of human dimensions and of being an eco-citizen, Heppner is investing its human and financial resources in a sustainable development policy based on concrete projects that initially involve four pilot agencies before being deployed throughout the group.
 
Within the framework of the ADEME (French Environment and Energy Agency) CO2 charter, Heppner is actively seeking to reduce carbon dioxide emissions in close collaboration with its clients. For this reason, Heppner has opted for a larger variability in its organization, massifying flows thanks to new transport plans at the national and international level. And by using Natural Gas Vehicles (NGV) in function with the freight distributed and going so far as to instigate use of double gas peddles on certain rounds. At the same time, Heppner plans to step up the replacement of 50% of its fleet between the end of 2010 and first half of 2011, representing 240 motors, of which the first half will be conform with the EURO IV norm and the second half the EEV (Enhanced Environmental friendly Vehicle) antipollution norm. Better control over carburant consumption is also a matter of to paying close attention to over-consumption by setting up automatic alert systems.
 
When it comes to infrastructures, new buildings are being outfitted with new generation equipment respecting strict environmental norms (recuperating and recycling rain water, natural lighting in corridors, heat pumps…).
 
As for IT consumables, efforts to reduce and recycle waste have been undertaken.
 
At the human resources level, Heppner has the means to carry out in the best possible conditions its sustainable development strategy by involving the personnel of the company. Training programs – eco-behavior, gestures and posture -- are being launched for drivers and personnel working at the docks.
 
“On the strength of being more and more deeply rooted in the national territory and an original alliance policy linking us to the rest of Europe thanks to our place within the System Alliance Europe network, we are among the leading European supply chain operators in France today.
 
At the global level, the partnership agreements we have signed with Hellmann Net confers us remarkable development prospects and positions us in the very dynamics of international trade, in particular with emerging countries.
 
We are navigating this critical period of the crisis by conserving capacity to guarantee our clients an optimal and quality service. With the market becoming smaller, Heppner is keeping intact its potential and desire to move ahead and is stepping up investments more than ever. The group is ready to seize any opportunity the crisis will engender. Our long-standing multi-specialization, our healthy balance sheet and our liquidity places us in a very good position to be on the attack and serenely face the future,” comments Jean Schmitt, Heppner CEO.