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«Acquisitions should support organic growth» |
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| Panalpina boss Monika Ribar on strong leadership, acquisitions objectives and the company's ownership structure. The former CFO has been running the company since October 2006. She sets out her objectives in conversation with Lutz Lauenroth, deputy chief editor of Deutsche Verkehrszeitung DVZ. Interview of 24 April 2007.
Ms Ribar, you have been head of Panalpina for six months now: what has made the biggest impression on you so far?
Our people, starting with my management team and extending right through to the Panalpina employees I have visited at sites all over the world in the past few months. I always learn a tremendous amount when I go to meet people on the spot – and this applies to customers no less than staff. That has certainly turned out to be the biggest change for me in my present role. |
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| When you took up your appointment you were quoted as saying: "What the Group needs now is strong leadership and a clear structure." Didn't Panalpina already have these?
That's not actually what I meant. But we had gone through a fairly long period of uncertainty after Bruno Sidler stepped down at the start of last year. That's why it was important to send a clear signal that the company now had well-defined leadership once again. We did of course have a structure, but we had already started making certain organizational changes, and these inevitably led to a certain degree of restlessness. We have been working to address this.
What objectives do you have with regard to where Panalpina is heading? Or to put it another way: what will your shareholders be paying you to do in the next few years?
My goal is to build on the Group's strengths. Our results for 2006 prove that we are a successful company. However, it is our customers, not our shareholders, who decide whether we are successful or not. The decisive factor is whether we are offering them the right services. In other words, the shareholders are paying me to ensure Panalpina's long-term existence. That's why I am certainly not one of those people who agonize over every movement of the share price. After all, value is only created for employees, customers and shareholders if the company can survive in the long term. That is what I see as my task.
How do you intend to achieve this?
We must grow further. Our core air freight and ocean freight activities are volume businesses, so we intend to expand our global network further. This will be achieved through organic growth, and also acquisitions where these make sense. We must also try to reduce our transaction costs by means of organizational changes, without affecting the quality of the service we provide.
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| We are not interested in acquisitions just for the sake of buying more turnover, but rather to expand our network and achieve further organic growth.
Monika Ribar, CEO |
| At the annual results press conference recently, you hinted that acquisitions were on the cards. You mentioned the automotive and healthcare industries as possible targets, and also referred to China. If you have such clear ideas about where you're heading, you presumably have something up your sleeve already, don't you?
No, we haven't. We have no really definite takeover targets at present. However, it is part of our strategy to strengthen our network through acquisitions. This is not simply for the sake of buying more turnover, but rather to expand our network and achieve further organic growth. Acquisitions should support organic growth. In terms of air freight and ocean freight volume, we aim to grow faster than the market.
That's what everyone wants, though. Who's going to lose out?
We are still working in a hugely fragmented market. The more our customers manufacture and sell on an international scale, the more they will demand international forwarding and logistics concepts. Local forwarding companies can no doubt ship goods by air and sea, but a global network is increasingly required to meet the needs of today's customers.
So the big companies will continue to get bigger?
That's it exactly. And many medium-sized companies will ensure a global presence via cooperation agreements.
Another way you could grow would perhaps be to add further key industries to your list, instead of concentrating on five as you have done so far.
We work for a variety of sectors and not just a handful of key industries. However, we do have specialist expertise in these key industries. You have to know these industries really well in order to offer them the best service concepts. However, that doesn't mean that we wouldn't like to gain other customers, of course. Any company that uses intercontinental shipping services for its B2B activities is a potential Panalpina customer.
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| | We don't want to do everything ourselves. That's why we work with a wide range of subcontractors in the forwarding business. Monika Ribar, CEO |
| Many other global players are working on their own overland transport networks to complement their ocean freight and air freight services. Where does Panalpina stand on this issue?
It's quite simple: we don't want to do everything ourselves. That's why we work with a wide range of subcontractors in the forwarding business. It's just that this isn't our core business. At present it doesn’t seem to me that Panalpina in its current structure would have the necessary expertise to build up its own overland transport network from scratch.
Panalpina's strategy of not tying up capital in its own vehicles and warehouses is well known. Presumably there's no likelihood that this non-asset-based strategy will change, now that the top manager is a numbers person?
It's not really a question of numbers. We simply have more flexibility if we don't tie up our resources in assets. We have just been talking to our new CFO about precisely this question: whether to buy premises or use external partners. But empty warehouses and offices cost money. For me, flexibility is really much more important.
How would you describe Panalpina's structure today? Is it centralized, decentralized, sector-based or organized geographically?
Our organization is very strongly oriented towards regions. That has always been a tradition at Panalpina. The regional heads report to me. In addition, though, there is also a very strongly centralized structure in certain branches of the business. In other words, the basic principles are laid down here in Basel. That's why there is a head of ocean freight and a head of air freight, who make strategic decisions in consultation with the Board. The same applies to marketing and sales, and to operational functions carried out by the Executive Board. To make all this run smoothly, the strong leadership we talked about earlier is clearly needed.
So do the heads of ocean freight and air freight also direct the procurement of shipping capacity centrally?
Basically, we have a centralized air freight and ocean freight division. This division develops the central concepts, often with the help of support and ideas from below. It is also responsible for direct contact with the customers. Our ocean freight and air freight units cooperate with about five forwarding companies each, but we do of course also work with other carriers. Procurement is therefore carried out in a highly decentralized fashion.
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| I don't see us as a company that is driven by the share price. I'd like to spend less time looking at quarterly results and more on our long-term strategy.
Monika Ribar, CEO |
| Panalpina had a very successful year in 2006. What were the deciding factors?
It was a very positive year for the logistics sector as a whole. Furthermore, the sectors we define as our core industries – such as high tech, the project business and the oil & gas industry – all did very well. Conditions were therefore very favourable on the customer side. At the same time, Panalpina proved that it has enormous reserves of strength to call on when faced with a crisis. The accounting scandal and the departure of Bruno Sidler were a huge shock for the company, especially so soon after the successful IPO.
That brings us to the stock market. Is the current share price what you expected? After all, you floated at CHF 80 per share, and the price is now over CHF 200.
I don't see us as a company that is driven by the share price. I'd like to spend less time looking at quarterly results and more on our long-term strategy.
Even after the IPO, the Ernst Göhner Foundation is still your main shareholder, with a 44.6% stake. Will this remain the case as the share price rises?
So far I have seen no sign that the Foundation wishes to sell any part of its holding. I know that it has an extremely close relationship with Panalpina, so I can't see any reason why it should wish to withdraw at this juncture.
But wasn't that close relationship mainly with Gerhard Fischer, who was head of Panalpina for many years and is now Chairman of the Board of Directors? And Fischer is due to step down in May.
No, I don't think that's an accurate assessment. Of course, Mr Fischer will be a hard act to follow at Panalpina, but the company is going through a perfectly normal process of handing over to the next generation. And since we went public, our Board of Directors has consisted of three representatives from the Foundation and four independent members.
Where will Panalpina be in five years' time?
Five years from now, Panalpina will be the leading logistics supplier with an asset-light structure. We shall still be one of the big players. Even if some companies overtake us thanks to acquisitions, I am convinced that we are on track for success.
Ms Ribar, thank you very much for talking to DVZ.
Copyright (c) 2007 Deutsche Verkehrszeitung |
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Monika Ribar took over the operational management of Panalpina on 1 October 2006. She was appointed to the post of Chief Executive Officer (CEO) only one year after accepting that of Chief Financial Officer. The Swiss citizen has been employed by the logistics company since 1991 and has been a member of the Executive Board for over six years. Having graduated in business administration from the University of St. Gallen, Monika Ribar began her career in the Controlling department of the chemical group BASF in Vienna. Three years later she returned to Switzerland and worked in Zurich for Fides – now KPMG – before joining Panalpina. For the past few years she has served on the board of directors of Julius Bär and Logitech. Curriculum Vitae
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