C.H. Robinson announced profits plunged 22% in the second quarter compared with a year ago, coming up well short of the lackluster Bloomberg News consensus forecast of industry analysts.
The freight broker earned $111.1 million in profits for the three months ending June 30, 2017, or 78 cents per share. The Bloomberg forecast called for $128 million, or 91 cents. One year ago, C.H. Robinson’s figures were $143.1 million or $1 per share.
In a positive note, top-line revenue grew 12% to $3.7 billion, about $70 million better than the Bloomberg forecast.
But as Transport Topics has previously reported, freight brokers that rely on contracts with shippers have suffered from lower margins this year, particular in the second quarter, when truckload capacity tightened around Memorial Day. Since brokers are often locked into a rate with the shipper, the intermediary is hurt when it must pay more money to a driver to transport the freight.
C.H. Robinson’s margin compressed from 18% a year ago to 15% in the previous three months.
The multinational company, which is based in Eden Prairie, Minn., ranks No. 5 on the Transport Topics Top 50 list of the largest logistics companies in North America and is No. 1 in freight brokerage.
“We were able to continue to achieve market share gains during the second quarter; however, our income and EPS results were disappointing and finished below our expectations,” C.H. Robinson Chairman and CEO John Wiehoff said. “Our results were significantly impacted by truckload margin compression. Purchased transportation costs increased significantly during the quarter, while much of our customer pricing is committed at relatively flat prices. We have a strong history of honoring our customer contracts while adjusting to the market conditions, and I’m confident we will adapt and execute those changes in the months to come.”
The North American Surface Transportation unit increased gross revenue 10% to $2.4 billion, but the net after transportation costs dropped 9.8% to $359.9 million. After operating expenses were deducted, income dropped 23% to $140.3 million.
Within the unit, truckload net revenue decreased 14% year-over-year to $250 million in the second quarter, even though volumes increased nearly 8%. Less-than-truckload net revenue increased 2.1% to $97.1 million, but intermodal net revenue slid 6.3% to $7.8 million.
The Global Forwarding division, which is a forwarder of ocean freight and airfreight and provides customs brokerage, performed well even though it’s only a quarter of the size of the North American Surface Transportation unit. Gross revenue surged 48% to $528.8 million, net revenue increased 25% to $121 million and operating income improved 24% to $27.7 million.
Within the division, ocean freight net revenue increased 22% percent to $73.2 million, airfreight improved 31% to $24.5 million and customs grew 41% percent to $16.3 million.
Robinson Fresh, which buys, sells and markets produce and other perishable items in North America, South America, Europe and Asia, reported a slight 0.5% drop in gross revenue to $657 million. However, the results down the income statement were poor with net revenue dropping 10% to $60.8 million and operating income nosediving 48% to $14.2 million.