CEVA benefits from buyers reviewing deals

20 November 2009

20 November 2009 | Jake Kanter

Organisations overhauling their logistics contracts has helped boost transport firm CEVA Group's new business wins by over a quarter this year.

In the Dutch company's third quarter earnings announced yesterday the value of new deals had increased 27 per cent to ?1.67 billion (£1.49 billion) in 2009 - a result of customers switching suppliers and a more aggressive sales push.

CEVA's chief financial officer, Rubin McDougal, told SM: "More people are benchmarking and where they may have previously rolled over with a supplier contract, they are saying 'let's take a closer look'.

"We have seen the same thing, where some of our current customers have said things are good… but given the current pressures they want to be sure they're getting the most for their money. It is more of an advantage than a disadvantage [for CEVA] because of our relative market share, but it certainly has risks, as well as opportunities," he said.

Despite the rise in new business, CEVA's overall revenue fell 15.7 per cent to ?4 billion (£3.58 billion) for the nine months ended 30 September 2009, compared with the same period last year. It said external economic factors, as well as falling volumes of work, in particular the "deflated" airfreight market, contributed to the decline.

McDougal said CEVA is applying "a lot" of pressure on suppliers to cut costs and notable savings have been achieved on material prices and temporary labour. He praised the work of CEVA's procurement team in cutting costs and helping the company exceed its annual ?100 million (£89.5 million) savings target this year. "Procurement is invaluable to me. There is such a difference between a truly professional procurement organisation and a price taker."

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