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CH Robinson’s disastrous second quarter may have made its mark on full-year income, but a buoyant final quarter has left the company feeling optimistic about the year ahead.
During an earnings call today, chief financial officer Andrew Clarke said fourth-quarter revenue of $3.9bn (up 16%) and increased profits (up 24.7% to $152m) provided strong momentum for 2018.
However, the company’s share price fell about 5% following the release of the results.
Group full-year profits were 1.7% down on 2016, coming in at $504m against $513m the year before, after three consecutive quarters of decline before the fourth-quarter recovery.
Full-year revenues showed robust growth, with a 13.1% increase to $14.8bn, while the forwarding division remained an outlier of success for the company.
Global forwarding performed remarkably well for CH Robinson during 2017, with full-year revenue and profit up 36% (to $2.1bn) and 13.5% (to $91m), respectively.
Mr Clarke said: “Our forwarding business has been on a very nice growth trend over the past few years, during which time we have acquired and brought in several companies.”
However, fourth-quarter profits for the division dropped 31.6%, year on year, to $16.8m, despite a 24.2% increase in revenue, up to $591m – the decreased profitability linked to increased operating costs.
And increased operating costs seemed to be one of the main factors cited by the company to explain the poorer performances across its other divisions.
CH Robinson’s largest unit, surface transportation, posted a 6.9% decline in profitability, with income from operations of $628m against $9.7bn in revenues over the course of 2017.
More problematic was the performance of its Fresh service – which sources perishable goods – a 29.5% profit drop on revenue of $2.4bn (up 3.1%).
Mr Clarke said the company had seen personnel numbers grow more than 7% in the last 12 months, resulting in a 10.8% increase in wages, while total operating costs had grown 24%.
The autumn acquisition of Milgram, for $50m, accounted for 8% of the staff, but chief executive John Wiehoff remained positive for the year ahead.
“Figures we have for January so far show that revenues are up, year-on-year per business day, even though truckload volumes have fallen,” he said.
“Given the economy, and the heightened demand for freight, we are expecting significant price increases and will undoubtedly benefit from corporate tax reform in the US.”
Mr Wiehoff added that the company’s portfolio of services was “stronger and more diversified than ever”.