C.H. Robinson Reports 58.2% Earnings Drop for Q4
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C.H. Robinson Worldwide Inc. experienced a year-over-year decline in revenue and earnings during the fourth quarter of 2022, the company reported Feb. 1.
The Eden Prairie, Minn.-based logistics and shipping company reported net income decreased 58.2% year-over-year to $96.2 million, or 80 cents a diluted share, for the three months ending Dec. 31. That compared with $230.1 million, or $1.74, during the same time the previous year. The total revenue decreased by 22.1% to $5.07 billion from $6.5 billion.
The results were below expectations Wall Street, which called for $1.35 per share and quarterly revenue of $5.6 billion, according to Zacks Consensus Estimate.
For the full year, C.H. Robinson reported net income of $940.5 million, $7.40, on revenue of $24.7 billion, compared with net income of $844.2 million, $6.31, on revenue of $23.1 billion in 2021.
CEO Bob Biesterfeld departed shortly after the quarter ended. Chairman Scott Anderson was appointed interim CEO, and the company is searching for a permanent chief executive.
He thanked Biesterfeld for his contributions during a call with investors Feb. 1.
“He played an important role in positioning C.H. Robinson for long-term success,” Anderson said. “We wish Bob all the best. In order to accelerate C.H. Robinson’s strategic initiatives and take the company into its next chapter, the board felt that a change in leadership was needed.”
Anderson noted there has been unseasonably soft demand for transportation services because shippers have been managing through elevated inventories amid slowing economic growth. He pointed out prices for ground transportation and global freight forwarding are declining due to the changing balance of supply and demand.
C.H. Robinson announces financial results for the fourth quarter of 2022 https://t.co/O1iE1RK6uy pic.twitter.com/VShg7aDqA1 — C.H. Robinson (@CHRobinson) February 1, 2023
“While the correction in the freight-forwarding market was certainly expected, the speed and magnitude of the correction in only two quarters was unexpected, with ocean rates on some trade lanes already back to pre-pandemic levels,” Anderson said. “As a result, our operating costs were misaligned. As was announced on our third-quarter earnings call, we have taken actions to structurally reduce our overall cost structure.”
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North American Surface Transportation revenue in Q4 decreased 8.5%, to $3.56 billion from $3.9 billion year-over-year. Income from operations fell 9.5% to $162.6 million from $148.4 million. The NAST revenue decline primarily was driven by lower truckload pricing and volume.
Overall volume growth was down 2% for the quarter, while operating expenses rose 4%. The increase in operating expenses mostly was because of $9.5 million in restructuring charges, higher legal settlements and increased technology costs that were partially offset by lower equity compensation.
“Our Q4 financial results reflect the price declines and slowing demand in the freight forwarding and surface transportation markets,” Chief Financial Officer Mike Zechmeister said. “Our fourth-quarter total company adjusted gross profit, or AGP, was down $88 million, or 10.3%, compared to Q4 of 2021, driven by a 39% decline in global forwarding and partially offset by a 5.7% growth in NAST.
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“The market softness was also prominent on a sequential basis, with total company AGP down 13%, including a 24% decline in global forwarding and an 11% decline in NAST.”
Global Forwarding revenue dropped 52.7%, to $1.01 billion from $2.14 billion from the year-earlier period. Income from operations decreased 80.8% to $28.2 million from $146.8 million. The decline in revenue was driven by lower pricing and volumes in the ocean and air services. The report noted this reflected softening freight demand. Operating expenses decreased 1.4% due to lower incentive compensation and credit losses that were partially offset by $7 million of restructuring charges and increased technology expenses.
C.H. Robinson ranks No. 1 on the Transport Topics Top 100 list of the largest logistics companies in North America.