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Global disruptions created by the coronavirus pandemic depressed profits and revenue at Expeditors International in the first quarter.
The Seattle-based logistics company said net income fell 12% to $122.3 million from $139.7 in the same period a year earlier. Diluted earnings per share dropped to 71 cents from 80 cents.
Revenue declined 6% to $1.9 billion from just more than $2 billion.
“[The company fared better] than expected, given the contraction in demand across geographies, as well as the severity and suddenness of the collapse in air carrier belly space and reduction in containership sailings,” CEO Jeffrey Musser said in a May 5 statement.
But the number of factory shutdowns, commercial flight cancellations and reduced ocean sailings as nations and regions fought to contain COVID-19 ate into the company’s operating income, Chief Financial Officer Bradley Powell said.
Expeditors experienced an increase in demand for shipments of medical equipment and supplies to help combat COVID-19. It also moved more electronics needed by people practicing social distancing and working remotely, Powell said.
“Conversely, we saw a significant decline in shipments from our customers in retail, aerospace, automotive, and the oil and energy sectors,” he said.
Ocean freight declined 10% during the quarter compared with the same period in 2019. Airfreight dropped 7%.
The company realized some savings as salaries and related expenses declined 4% as a result of lower bonuses and commissions paid out under its variable compensation plans compared with the prior year. But unlike many other firms in the freight and logistics sector, Expeditors has not furloughed or laid off employees, Powell said. The company has 18,000 employees.
“We expect disruptions from COVID-19 to continue for the remainder of 2020,” he said. “Our balance sheet and cash flow are strong, and we expect to continue to make investments in our people, processes and technology.”
Expeditors had $1.1 billion of cash on hand as of March 31.
“While there is talk of various markets starting to come back on line, the impact of COVID-19 continues to have an enormous impact on the global economic environment,” Musser said. “While we remain fully staffed and ready for when economies across the world start to regain their post-crisis footing, we do not know when, how quickly, or how uniformly that will take place.”
Expeditors ranks No. 6 on the Transport Topics Top 50 list of the largest logistics companies in North America.
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