K+N gets back to profit growth, but to hit 2017 targets, it must do better in Q4
Despite a return to growth in its bottom line, Kuehne + Nagel’s nine-month results released ...
XPO Logistics is set to return to the merger and acquisition arena after a two-year hiatus with an $8bn war chest.
Chief executive Bradley Jacobs told The Loadstar: “We are looking at companies that are in the same lines of business we are in, and companies that have at least the majority of their business in North America and Western Europe.
“Although, the very largest acquisition [targets] tend to be multinationals that may well have a large presence in other geographies, and we’re comfortable with that.
“There are two types of deals we are looking at: those that cost hundreds of millions; and those that cost billions. In the case of the former, a deal could happen pretty quickly, within a couple of months even, while those that cost a couple of billion take a long time.
In addition, the company has drawn up plans to invest in 10 new last-mile hubs in North America, to take its total up to 55, with a further 30 to be created in 2018 – smaller-sized facilities in the up-to-200,000sq ft range and located close to high-density population areas.
And XPO has plenty of financial firepower to back these potential investments and acquisitions after agreeing a $665.5m common stock offering.
The quarter saw XPO record group revenue of $3.76bn, compared with $3.68bn for the same period in 2016. Adjusted EBITDA was $370.8m, $354.9m last year – although it then still owned the Con-way truckload unit that was sold off to TransForce for $558m last October.
Mr Jacobs added: “Our strong start to the year accelerated in the second quarter, with record results for revenue, net income and adjusted EBITDA.
“The most notable growth came in last-mile and contract logistics — two fast-growing parts of the supply chain where we hold leading positions in e-commerce. Importantly, we’re continuing to grow adjusted EBITDA faster than revenue in both transportation and logistics.
“The investments we’re making in sales and technology have already yielded a record $1.43bn of new business through June, which is 62% higher than last year. Our global pipeline stands at over $3.3bn, our cost initiatives have substantial runway, and the operating environment is favourable.
“Given these strong fundamentals, we raised our two-year guidance. Our new targets are for adjusted EBITDA of at least $1.365bn in 2017 and $1.6bn in 2018.”
Chief strategy officer Scott Malat explained that a number of investments were ongoing in automation and data analytics in warehouses.
He said: “The logistics space is wide open for the development of some very interesting technologies. We are in the midst of designing a next-generation logistics facility in collaboration with a large customer.
“It’s a testing ground for bringing together all the things we do in an integrated way, and we will use that as a launch pad for innovation and push that out to our 750-plus facilities around the world.”