Future direction of the Group
Retention of the business model
A fundamental change in our business model is not currently planned. One strategic priority will be the further expansion of the AUTOMOBILE and CONTRACT Divisions. Our goal is to be profitable in all business areas and to continue to grow. We intend to grow our shares in existing markets, open up new markets and win new customers by continuing our acquisition activities, developing collaborations in a targeted manner and establishing strategic partnerships. We will also extend our value chains in the business areas. Moreover, we will seek to improve productivity in all areas, even in the current multiple crisis environment, through consistent process and quality management, the use of opportunities arising from digitization, automation and artificial intelligence (AI), and strict cost management.
Expected macroeconomic conditions
Muted global economic growth
The World Bank predicts that the global economy will be markedly gloomy in the 2025 financial year as a result of geopolitical disputes, the repercussions of structural changes and the direction of future financial and economic policy after the Bundestag elections.
The German Bundesbank likewise expects economic growth to slow down. It forecasts a decrease in global economic growth to 2.4 percent in 2025, down from 2.6 percent the previous year. Geopolitical tensions, protectionism, and climate policies pose significant downside risks to economic growth and upside risks to inflation. In addition, potential trade wars initiated by the new US administration have results in new high risks and uncertainties.
Economic climate in Europe
Economic forecasts for Europe in 2025 paint a picture of moderate growth. The European commission expects the European Union’s Gross Domestic Product (GDP) to grow by 1.3 percent, while the eurozone’s GDP is forecast to grow by 1.4 percent. On a positive note, inflation is expected to fall. In the eurozone, inflation is expected to fall to 2.1 percent in 2025, closing in on the European Central Bank’s target of 2.0 percent.
According to the January 2025 Monthly Report published by the German Bundesbank, the German economy was weak at the end of 2024. The economic situation is not expected to improve significantly in the first quarter of 2025 either.
The German government has revised its growth projection accordingly, now anticipating 0 percent GDP growth for the current year, 2025. In the fall, expectations for the current year were still 0.5 percent. The downward revision can largely be attributed the anticipated US tariffs and the exacerbated crisis in German industry. The German Council of Economic Experts (“Wirtschaftsweise”), which advises the German government and employs its own calculation model, still forecasts growth of 0.4 percent.
According to the German Bundesbank, the inflation rate in Germany is expected to be slightly lower than forecast as recently as June 2024 at 2.5 percent. However, the rate of inflation in services is only falling at a slow pace.
A gradual lowering of interest rates is anticipated for 2025 and 2026. The forecasts for 2025 and 2026 range from 1.8 percent to 2.0 percent, depending on the institution.
Sources for this section:
IMK, IMK Report No. 193, December 2024
IMK, IMK Report No. 194, January 2025
Tageschau.de 12/27/2024, 05:42 a.m. “IW survey: Business associations pessimistic about 2025”
Handelsblatt.de 02/06/2025, 12:09 p.m. “German economy threatening to shrink again in 2025”
Börsen-Zeitung, 11/15/2024 “EU lowers growth forecast”
Logistics sector again faces challenging year
Business climate logistics sector
(Source: Bundesvereinigung Logistik e.V.; 2015 = 100 = normal level)
At the close of 2024, the business climate in Germany’s logistics sector saw a marginal improvement. As part of its economic assessments, the ifo Institute conducts monthly surveys on behalf of the German Logistics Association (BVL) to gauge the Logistics Indicator.
The index fell slightly in 2024, plateauing at a low level in the final quarter.
The most recent BVL logistics indicator shows a slight upward trend in the business climate of Germany’s logistics industry. An uptick in business forecasts for the next six months is responsible for this positive forecast, as evidenced by the latest figures for the fourth quarter of 2024. Despite geopolitical uncertainties and structural crises, especially in the manufacturing industry, sentiment among German logistics companies has improved slightly.
By contrast, the SCI Logistics Barometer’s indicator value in January 2025 indicate a subdued business climate in the German logistics industry. The challenges faced in recent years remain and the cost dynamics continue to intensify. Despite these difficulties, the transport and logistics industry is looking to the future with muted optimism. Propensity to invest remains low and the level of planned investment continues to decline. The hope is that the new Federal Government will create a reliable framework that will lead to new economic momentum.
Revenue trends in the German logistics industry
Source: Bundesvereinigung Logistik e.V.
The business to customer transport (B2C) business area in Germany, in particular, is considered to harbor potential for the future.
The sector continues to be hampered by high cost pressures, especially due to the rise in tolls and labor costs. These factors are likely to lead to further cost increases in the coming months. Moreover, demand for skilled labor remains high.
Despite these challenges, positive developments have also occurred. Companies are increasingly turning to sustainable logistics solutions to reduce carbon emissions. The integration of new technologies such as artificial intelligence (AI) and the Internet of Things (IoT) requires significant investment, but also offers opportunities for efficiency gains and competitiveness.
Sources for this section: BVL Logistics Indicator, 4th Quarter 2024, including commentary
SCI Verkehr, SCI Logistics Barometer, January 2025
Development of BLG LOGISTICS in the following year
AUTOMOBILE Division
The German automotive industry is currently undergoing a comprehensive transformation, characterized first and foremost by the transition to electromobility and increasing international competitive pressure, especially from China. A further strain has been placed on the supply chains of the German automotive industry by the increasing scarcity of raw materials and primary products, particularly those used in the manufacture of semiconductors and batteries. The recently announced tariffs by the new US government on car imports will have far-reaching implications, which cannot be estimated at this time and will lead to a high level of uncertainty. On the whole, we therefore expect earnings contributions in the division to decline in 2025.
In the seaport terminals business area, handling volumes are forecast to rise slightly in 2025. The share of imports at the BLG AutoTerminal in Bremerhaven is expected to increase once more, particularly imports from China. Furthermore, the new inland terminal in Ahlhorn will offer additional alternative space that will help optimize processes.
The high & heavy segment was hit by the global economic slowdown in the 2024 financial year, especially in the construction industry, which led to a decline in volumes. Due to the rebound in cargo activities as well as technical progress, a slight increase in the volume of heavy goods is expected for the following year.
The BLG AutoTerminal in Cuxhaven can expect to experience a significant increase in handling volumes due to the conclusion of new contracts with three key accounts. In the future, the BLG AutoTerminal in Cuxhaven will also act as an import port for vehicles manufactured in Turkey.
Domestic terminals are expected to record a slight increase in volumes compared to the previous year. Growth will primarily be generated by the new site in Ahlhorn, which is scheduled to open in the second quarter of 2025.
Terminal handling in the new vehicle segment is up against stiff competition. The strategic goal of BLG LOGISTICS is to expand the remarketing and used vehicle segment in order to achieve higher technical value added.
The volume of road transport within the AutoTransport business area is predicted to marginally decrease compared with the previous year. Against this backdrop, we aim to increase the proportion of transport operations carried out internally and to reduce dependence on subcontractors.
Demand for vehicle transport capacity in the rail business area is expected to remain stable in 2025. Challenges associated with the provision of traction by railway companies due to the ongoing shortage of locomotive drivers as well as numerous construction sites in the rail network will continue to affect operations. At BLG RailTec, we plan to further expand the repair business for third parties, above all in the area of mobile maintenance.
In the Southern/Eastern Europe business area, there will be an increased focus on expanding transportation using our own fleet of vehicles. The long-term lease of permanent space in Gdańsk will create a stable basis for handling. Additional space is planned for 2025 to further expand capacities.
The transport operations of the joint venture in Ukraine will be maintained to the greatest possible extent despite the challenging situation.
The technical value added generated by BLG AutoTec will be presented separately in the Technology business area from January 1, 2025 onwards. As a result of the expected handling volumes, a slight increase in value-added activities is also expected.
CONTRACT Division
In 2025, the CONTRACT Division will continue to face the obstacles posed by the challenging economic environment described above.
On the upside, the trend towards more logistics outsourcing is opening up new opportunities. Demand for automation among customers gives us the opportunity to act as logistics architects. Production increases in Eastern Europe are also creating new markets. The dual strategy of combustion engine and electric vehicle production increases the requirements and thereby the scope of logistical services. Large-scale projects and infrastructure projects remain unaffected by the economic trends and offer stability.
In view of the difficult circumstances, the focus remains on optimizing the profitability of existing businesses through stringent cost management.
This holds particularly true with regard to mobility, which is facing major challenges in view of the transformation of the automotive industry. Something which has been evidenced by subdued volume planning among customers. Sites where we provide services for the automotive industry, such as Bremen and Stuttgart, have been particularly affected.
In the Industrial & Energy segment, we were able to further expand business with existing customers at our locations and a positive revenue trend is forecast for the 2025 financial year.
The consumption slump is also hitting fashion logistics. We expect growth to vary among our sites in this segment. Cost pressure among customers and the availability of logistics capacities on the market are leading to stiff competition. Acquiring new customers and retaining existing ones remains challenging.
BLG Cargo Logistics expects handling volumes to fall. However, this development will likely be offset by an optimization of the customer portfolio. Uncertainty also exists with regard to the possible introduction of new tariffs.
The US site is continuing on the earnings path spurred by the restructuring that began in 2023. Among other things, success has been achieved in subletting vacant space and the quality of our services has improved. The new management has also rolled out new sales approaches and business streamlining. A positive result is not expected until 2026.
In South Africa, the outlook for business remains stable and positive.
On the whole, business in the regions with existing customers was successfully consolidated and grew in many places in 2024. A special focus was placed on the continued diversification of the customer portfolio with the aim of maintaining stable performance even under difficult economic conditions. In light of this, a positive result is expected for the coming year, with the absence of significant one-time effects that weighed on the 2024 financial year.
CONTAINER Division
As the container terminals still have available capacity reserves – at least in the medium term – the trend toward consolidation is strengthening the market power of the remaining consortia/shipping companies while simultaneously increasing the pressure on earnings. This has exacerbated the need to find and implement sustainable cost reductions and efficiency improvements at the container terminals. Optimization measures that have already been launched and successfully rolled out since 2019 in this context will also be permanently anchored in an organizational unit set up specifically for this purpose from January 2025 onwards. The aim behind this approach is to optimize earnings in the long term.
With regard to the EUROGATE container terminal in Hamburg, stable handing volumes are forecast for 2025 in light of the gradual relocation of services from Mediterranean Shipping Company S.A. (MSC) to the Hamburg terminals of Hamburger Hafen und Logistik AG (HHLA) and the newly acquired handling volumes in the Gemini Cooperation.
As things currently stand, handling volumes are expected to rise significantly at the Bremerhaven site in 2025. This outlook is largely based on the assumptions of the partners and customers of our local joint ventures.
Wilhelmshaven is expected to experience a significant increase in volumes in 2025 due to the long-term handling plan agreed with the partner and customer Hapag-Lloyd AG. Achieving reasonable capacity utilization of the EUROGATE Container Terminal in Wilhelmshaven continues to be a top priority. The prospects of acquiring additional liner services in the next few years are also good.
The geopolitical situation that prevailed in 2024 and the resulting extraordinary positive effects from storage fees and reefer revenues are expected to subside for the CONTAINER Division in 2025. Increasing cost pressure and the accelerated progress of the various automation projects are forecast to lead to a significantly diminished, although still positive result for 2025. Nevertheless, this relies on the continued sustainable implementation of the restructuring and optimization measures in the 2025 financial year.
Planned capital expenditure
We adjust our investment plans in line with the constantly changing market conditions, paying particular attention to our liquidity and results of operations. Furthermore, BLG LOGISTICS also takes sustainability aspects into account when evaluating investment projects, for example when developing new locations. Significant expansion, process optimization and replacement investments are planned in the coming year in the AUTOMOBILE Division, for example for the ongoing replacement of older trucks and the buyback of car wagons from leasing in the AutoTransport and rail business area. In the seaport and inland terminals business areas, capital expenditure mainly relates to various measures to expand and modernize spaces and buildings and the upgrading of handling equipment. In addition, investments will be made to optimize the division’s IT network. In the CONTRACT Division, capital expenditure relates to the development and expansion of new logistics centers and the expansion of existing business. Another focus is the replacement of technical plant and machinery.
An investment volume of around EUR 315 million is planned for the necessary expansion and replacement investments, and for investments in process optimization (excluding the CONTAINER Division, of which EUR 167 million is earmarked for capitalized rights-of-use according to IFRS 16).
Overall statement on the expected development of the Group
Expected changes for 2025
At the time of preparing this report, the war between Russia and Ukraine was still ongoing. Current conflicts in the Middle East and the Red Sea may cause further disruptions in supply chains and shipping company schedules as ships are forced to take detours. Other challenges may arise from cautious consumption due to prevailing consumer uncertainty, the new federal government in Germany and the tariffs announced by the new US government.
Personnel expenses will once again be particularly strained in 2025. Despite falling inflation rates, calls for higher wages are being encountered across all sectors throughout Germany. Against the backdrop of declining order volumes in numerous areas of BLG LOGISTICS, this represents a particular challenge when it comes to a responsible wage policy.
EUR thousand |
|
Actual 2024 |
|
Forecast 2025 |
---|---|---|---|---|
EBT |
|
91,791 |
|
significant decline; positive result |
EBIT |
|
103,342 |
|
significant decline in line with EBT |
Revenue |
|
1,220,664 |
|
roughly at previous year’s level |
EBT margin (in percent) |
|
7.5 |
|
significant decline in line with EBT |
RoCE (in percent) |
|
10.6 |
|
significant decline in line with EBT/EBIT |
In this environment of uncertainty, as things stand today, we expect revenue for the BLG Group (excluding the CONTAINER Division) to remain at roughly the same level as the previous year based on the above forecast. BLG LOGISTICS’s earnings expectations (EBT) for the 2025 financial year are lower than the forecast for 2024 but still very much positive, in the tens of millions. The year-on-year decline was mainly due to lower investment income from the CONTAINER Division, which was characterized by material one-time effects and temporary increases in income from storage fees in the reporting year. The AUTOMOBILE Division will also likely not be able to improve on the strong results achieved in the reporting year in view of the projected weak economic growth and the particular challenges faced in the automotive industry. We expect the CONTRACT Division to return to a positive earnings trend despite a challenging environment following the processing of various one-time effects in the past financial year.
Against the background of the situation as outlined at present, this forecast is accompanied by a high degree of uncertainty.
We will continue to pursue the goal of a continuous, earnings-based dividend policy. Accordingly, we will allow our shareholders to participate in earnings to a reasonable extent according to the performance of the business moving forward.
This annual report was prepared on the basis of German Accounting Standard 20 (DRS 20), as amended. Apart from historical financial information, this annual report contains forward-looking statements on the future development of the business and the business performance of BLG LOGISTICS, which are based on estimates, forecasts and expectations, and can be identified by wording such as “assume,” “expect” or similar terms. These statements may, of course, vary from actual future events or developments. We are not under any obligation to update these forward-looking statements in light of new information.