UTi’s Fiscal 3rd Quarter Losses Mount
This story appears in the Dec. 15 print edition of Transport Topics.
UTi Worldwide Inc. last week reported a quarterly loss that more than tripled to $34 million, or 35 cents per share, in the wake of the abrupt departure of CEO Eric Kirchner and acquisition talks that were canceled.
The loss for the fiscal third quarter mounted from $9.1 million, or 9 cents, in the same period a year ago.
Revenue dipped 6.6% to $1.08 billion for the period ended Oct. 31.
The freight forwarding and logistics operator, which ranks No. 9 on the Transport Topics Logistics 50, said Executive Vice President Edward Feitzinger has replaced Kirchner, who left after six years in the post. Feitzinger also replaced Kirchner on the company’s board.
The earnings were released less than a week after the company said that acquisition talks with Danish trucking firm DSV A/S had been called off.
Chairman Roger MacFarlane said on a Dec. 9 conference call that there currently are no acquisition discussions.
He also said acquisition inquiries are continuing, without naming any company, because “we know we are a highly attractive company.”
“Our situation is not a complicated one,” Feitzinger said on the conference call, pledging to focus on operating income growth, rather than revenue.
Long Beach, California-based UTi noted a drop in net revenue, or the amount left after paying transportation costs, of 3% to $381 million.
He also noted some signs of progress after “service issues and billing challenges associated with the rollout of our freight forwarding system in the United States.”
One such sign was positive cash flow of $8.5 million in the quarter, which was the first period in seven quarters where that financial performance benchmark was attained.
Chief Financial Officer Richard Rodick said that results worsened in the freight forwarding unit. Profit before interest, taxes, depreciation and amortization fell, and revenue in that business fell more than 10% to $689 million.
On the other hand, contract logistics financial performance improved, including a 3% rise in revenue to $388 million.
Another factor in the quarter was a $19.6 million charge related to a customer bankruptcy. Some of the lost revenue could be recouped through an insurance claim that has been filed, UTi said. The unidentified insurer hasn’t yet said whether it will pay the claim.
The acquisition talks with DSV, Europe’s largest trucking company, were disclosed in a Bloomberg News report, which pegged the purchase price at $13 to $14 per share and cited unidentified persons close to the talks.
After the earnings report, the shares fell about 15% to trade below $11.50 per share. That’s a drop of more than 30% in the past 12 months.
UTi also announced a partnership with China’s Beijing Changjiu Logistics Co. Ltd. to offer logistics services to automotive manufacturers and suppliers in that nation.
“Changjiu Logistics is a pioneer in finished vehicle transportation and warehousing in China,” said Ditlev Blicher, UTi president for Asia-Pacific, citing plans to offer freight forwarding, order management and other services.
The statement from UTi said privately owned Changjiu is the top automotive logistics company in China with annual sales of about $500 million.
