ZURICH Sep 20, 2007 (Dow Jones Newswires)
Panalpina Welttransport Holding AG (PWTN.EB) said Thursday it has suspended part of its service offering in Nigeria, including its temporary importation services for oil and gas customers, amid a U.S. Department of Justice probe into improper payments in that and other countries.
The Swiss logistics company, which has its roots in Rhine shipping and is one of the world's largest freightforwarders, said the move would impact its earnings before interest, taxation and amortization, or Ebitda, by CHF20 million to CHF30 million in the current year.
It said its full-year guidance is unchanged. Panalpina forecasts growth of 9% or more in gross profit and an Ebitda/gross profit margin of 20% to 22%.
The announcement sent its shares sharply lower, as investors try to reconcile the news with earlier statements by the company that it didn't expect an impact on its business from the probe. The shares were down 7.5%, or CHF17.90, to CHF221 at 0907 GMT.
The stock plunged in July after reports of the probe, but recovered most of this as the company said it wasn't the target of the probe and was asked only to provide information.
Panalpina Finance Chief Juerg Honegger told Dow Jones Newswires in August that "we are not the target, not the subject of the probe."
The company in late July said that it had launched an internal investigation into its Nigerian business practices. It retained law firm Baker & McKenzie and a forensic accounting expert to support the fact-finding process.
Today's announcement was a surprise to the market, Kepler Equities analyst Roger Steiner said, "given recent contacts and discussions with the company."
The forecast EBITDA impact seemed high, Steiner said, "especially assuming that this figure is likely only for four months."
The news doesn't look good, said Christopher Combe of Jefferies International. "That said, the market is likely to focus more on the long-term cash flow impact, rather than the credibility side." Combe rates Panalpina at buy.
Panalpina is currently holding an investor meeting in London.
The Justice Department is investigating possible illegal payments at nearly a dozen oil and oil-services companies that use Swiss-based Panalpina and other brokers in Nigeria and other parts of the world under the U.S. Foreign Corrupt Practices Act, which prohibits U.S. companies from bribing foreign officials to win or keep business.
On Aug. 14, Transocean Inc. (RIG), a Houston-based offshore-drilling contractor, announced it had expanded an internal probe over Panalpina, and said its investigation will focus on whether the agent has complied with local laws and the U.S. Foreign Corrupt Practices Act.
Copyright (c) 2007 Dow Jones & Company, Inc.
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