C.H. Robinson’s Q4 profits rise, but perishables disappoint

C.H. Robinson, one of the largest North American freight companies, today reported strong growth in the fourth quarter of 2018 and the full year, but delivered disappointing results in its perishables segment.

Overall revenue increased 4.5 percent, to US$4.1 billion in Q4, while net revenues rose 13 percent to $713.8 million, compared to the previous Q4. For all of 2018, net revenues increased 14.2 percent, year-over-year, to $2.7 billion on total revenues of $16.6 billion – an 11.8 percent increase over the previous year.

On the freight forwarding side, C.H. Robinson’s operations saw net revenue growth of 11.6 percent, y-o-y, to $143 million in Q4, led by its ocean and customs segments, which both rose 12.4 percent, compared to Q4 2017. Air cargo also saw a net revenue increase of 9.3 percent to $28 million over the same period, thanks to decreasing costs and an “improved customer mix,” the company said.

But while many other forwarders enjoyed a boost from the increased demand for cool-chain goods in 2018, the company’s perishables service, Robinson Fresh, saw total combined revenue for sourcing and transportation plummet by 10.6 percent, year-over-year, to $532 million in the fourth quarter, and by 6.1 percent, y-o-y, for the year to $2.3 billion.

The company said sourcing net revenues decreased 8.2 percent for Robinson Fresh, while case volumes fell 6.5 percent in Q4, due to “lower restaurant traffic” for its food-service customers. At the same time, Robinson Fresh’s operating expenses rose 7.9 percent, which was on partially offset by a 5.1 percent decrease in average headcount for the quarter.

Analysts at Morgan Stanley said investors will like the earnings-per-share y-o-y increases of 24 percent for Q4 and 32.5 percent for 2018, which were “driven by cost discipline,” but cautioned that “questions will remain around sustainability, the lack of strength in volumes and net revenues (relative to expectations) and the cycle.”

C.H. Robinson CEO John Wiehoff, however, remained positive about 2019, adding that capital expenditures of this year should be between $80 million and $90 million, “with the majority dedicated to technology.”

For January 2019, the company reported that “net revenue per business day has increased approximately 9 percent when compared to January 2018,” and that “truckload volume per business day has increased approximately 3 percent on a year-over-year basis in January.”

“We remain focused on top-line growth and operating margin expansion and believe our continued investments in technology will help enable us to achieve these objectives,” Wiehoff said. “A critical part of our strategy is to make investments that add value for our customers and carriers and drive growth for our business, regardless of where we are in the freight cycle.”

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