Adjusted EPS and Adjusted Profit at Panalpina – An Ongoing Concern, Troubling Culture

Panalpina-results

Today Panalpina published the results above.

Highlighted in yellow are the losses Panalpina has been incurring in last two years. It reminds me of several large banks in Switzerland who also have decent results, once you adjust for legal settlements/fines and goodwill adjustments. Not much good to investors though. Business is about bottom line – and above the reported EPS bottom line isn’t pretty!

I would argue that the legal settlements and goodwill impairments are one of the best places to look for badly run companies. For companies doing business around the world, there’s a decent chance, that if management doesn’t have a good compliance culture they’ll see their results cocked up on a regular basis. Of course they can’t admit that, otherwise their multi-million toplevel salaries would seem over-the-top and the managers could forget their performance bonus. So they adjust earnings to hide all their mistakes or the bad company ethics culture. In the case of Panalpina they’ve had two years running of fines. In the case of large banks it’s been longer.

If you invest, you entrust your money to someone. If that someone doesn’t see that their business is prone to regular fines and overpaying for acquisitions (subsequently adjusting goodwill, lowering EPS) then I really wouldn’t recommend investing money with them or their company.

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