The Gefco Group has reported a small decline in revenue for 2012 compared to 2011, while operating profit has dropped by more than half. The group, which is now majority-owned by RZD Russian Railways, saw a rise in revenue from new customers outside PSA Peugeot-Citroën, its former owner, as well as strong growth in markets such as Russia and China.

The company said that the backing of Russian Railways, which bought a 75% in Gefco last December for €800m, offered the group “very solid prospects”. It also said that 2013 promises to be “decisive”.

With PSA sales and production flagging in Europe, Gefco’s revenue dropped 4.7% last year to €3.6 billion ($4.7 billion), while operating income fell to €109m compared to €223m in 2011. Its profit margin fell from 5.9% to 3% in 2012.

The decline in business performance can largely be attributed to the struggles at PSA, which saw vehicle sales drop 16.5% in 2012 compared to 2011. In a financial statement last summer, PSA attributed the fall in Gefco’s profit margins six months into the year to a renewed pricing agreement the provider signed with PSA at the start of 2012 (read more here).

Strong growth outside PSA, Europe
But given the extent of PSA’s woes, particularly in Europe, Gefco’s performance was reasonably strong. Revenue from non-PSA customers grew in 2012 to €1.5 billion or 42% of total turnover, compared with 38% in 2011.

The provider is enjoying growth outside of Western Europe. Gefco said that the East Asia region saw turnover increase by 20% in 2012 thanks largely to growth in Gefco’s China businesses, which is divided into four main areas. Gefco China and Gefco Hong Kong specialise in door-to-door solutions for sea and air transport and for global sourcing in the automotive industry. Meanwhile, its joint venture Dongfeng Gefco provides logistics services at Dongfeng Peugeot-Citroën Automotive’s warehouse in Beijing. Lastly, its joint venture Shenzen Minsheng Gefco Logistics (SMGL) manages inbound and outbound logistics at the Chang’an Automobile PSA site at Shenzen.

Meanwhile, in Russia last year the company recorded growth of nearly 11%. Including activity from Gefco’s joint venture with Algai, the Russian automotive logistics specialist, growth in the region was reported at 22%.

Executives at Gefco suggest that the company’s new ownership structure is helping it to win new business. According to John Stocker, Gefco UK’s sales and marketing manager, since the sale of the majority stake to RZD, new carmakers in particular have been more willing to enter into discussions.

“People are now interested to talk to us about [our logistics] capabilities whereas in the past there was a slight reluctance by some of the OEMs because of our ownership by PSA,” said Stocker. “So effectively we have started to engage with companies that probably would not have engaged with us in the past.

“A lot of growth will be in the automotive sector,” he added.

PSA still owns 25% of Gefco.

Prospects for long-distance rail
Stocker suggested that the sales was also helping RZD expand internationally, as the Russian rail provider is now able to gain access to Gefco’s presence in 135 markets. He suggested that the provider would act as a sort of “front office”.

Stocker said that one of the big drivers of growth for the coming years would be the Pacific to Atlantic rail programme, something that RZD is leading. Gefco has already introduced several long distance trains between France and Russia, as well as from China to Russia, which it expects to increase under the new owners.

This will take in activity in China and the Central Asian states.

“In China there is a move away from the manufacturing clusters in southern China to move further north and further west,” said Stocker, “and that is moving it closer to the borders of Kazakhstan and those areas where Gefco is already present and where RZD is putting in its rail links to avoid the extremes of cold involved with going through the Siberian routes.”

Joint venture activity with Algai was also a contributor to 17% growth in Central Asia, Central and Eastern Europe and the Middle East. Gefco operates in this region through a joint venture known as EMMA (Eurasia Multimodal Alliance), with rail provider SSR.

Outlook for 2013
Gefco also highlighted its support of automotive customers in Brazil and wider South America. Along with logistics services in Argentina and Brazil, Gefco provides services for Brazilian manufacturers exporting to the wider South American market and to Europe. Those services include logistics engineering, inbound and outbound transport, and customs clearance.

In the most recent development, the company is supporting inbound shipments for Peugeot 208 production, which has just started at the carmaker’s plant in Porto Real (read more here).

Another well-documented development for 2013 is Gefco’s new role as fourth party logistics provider for General Motors Europe, which began in April this year. The business will see Gefco managing GM’s inbound and outbound supply chain across Europe, Russia and Turkey, combining volumes with its established transport and logistics services for PSA Peugeot Citroën, its former majority owner, as well as its other customers. The alliance is expected to add 20% to Gefco’s annual revenue.

In its statement, Gefco said that it is currently engaged in projects to improve a number of operational and management areas, including improving IT systems and “refocusing” the group’s structure to “give it the capacity to meet the needs of increased globalisation”. While this could be a reference to changes the company might make under its new ownership, the company stated that its goal is to become a leader in logistics for industry in the world’s fastest-growing markets.