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C.H. Robinson Worldwide on Oct. 30 reported profit and sales declines that were worse than expected due to excess shipping capacity and waning demand.
The logistics and shipping company, based in Eden Prairie, Minn., finished below its own expectations in net revenue, operating income and earnings per share. Chief executive Bob Biesterfeld maintained an optimistic long-term view.
“Part of our customer value proposition, particularly in our committed relationships, is managing through freight cycles and the pricing volatility that occurs as a result of the cyclicality of our industry,” Biesterfeld said in a statement. “Our people did a great job of controlling what we can control, which includes winning increased awards in contractual bids with our largest customers.”
C.H. Robinson said its profit fell 16.5% to $146.9 million against a strong third quarter last year. That amounted to $1.07 a share, below the $1.14 a share that was the consensus estimate of analysts who cover the company.
Revenue was $633.4 million, down 9%. Operating income was $201.1 million, down 18%.
Shares of C.H. Robinson were trading down 14% at midmorning. The stock had been up 9.5% for the year so far, but the big drop put it into negative return territory.
Aggressive industry pricing and soft demand created difficult comparisons with the third quarter of 2018, Biesterfeld said on a call with analysts.
“Our financial results this quarter demonstrate that we’re not immune to large cyclical swings in the freight environment,” Biesterfeld said. “We believe that our continued investments through these downcycles will drive better alignment between our net revenue growth and our costs.”
The environment proved hardest for Robinson’s largest segment, North American Surface Transportation. Its revenue was down 13% and operating income was down 21%.
The company did have single-digit increases in its contractual truckload volume during the quarter but that was offset by significant declines in the spot market.
Revenue in C.H. Robinson’s Global Forwarding segment showed a modest increase of 1.3% and its operating income increased 3.5%. Global Forwarding results were aided by the first quarter acquisition of Madrid-based The Space Cargo Group.
Biesterfeld told analysts that the segment saw air and ocean volume declines in the quarter due to concerns over trade tariffs and fears of slowing global economic growth.
C.H. Robinson ranks No. 5 on the Transport Topics Top 50 list of the largest logistics companies in North America.
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