XPO Logistics Inc.
derailed analysts’ forecasts in the last quarter, as strong demand for e-commerce enabled the company to recover from a windlessness in the early stages of the coronavirus pandemic.
The transportation and logistics service provider from Greenwich, Connecticut, announced Thursday its third quarter sales of US$4.22 billion, up 1.6 percent from a year ago and 9.4 percent higher than analysts surveyed by FactSet had expected. Diluted earnings per share for XPO were 83 cents, a decrease of 27% compared to the third quarter of last year, but 50 cents higher than expected.
For XPO, adjusted earnings before interest, tax, depreciation and amortization for the quarter were $439 million, virtually unchanged from a year ago. The company has previously stated that it expects to receive at least $350 million in the third quarter from Ebitda.
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Our business recovered strongly in the third quarter, with growth in contract logistics, last mile deliveries and other segments, says XPO CEO Brad Jacobs. The outsourcing of supply chains is accelerating and e-commerce remains a lucky proposition for us.
Investment bank analyst Jack Atkins Stephens Inc. called the early results impressive, but noted in a study released Thursday that some XPO competitors reported higher operating and net profits in the third quarter as the freight economy improved.
Demand for transport and storage facilities is increasing as US companies reopen after the blockades at the start of the pandemic. The increase in online sales puts pressure on logistics and delivery networks as consumers go home to fill their digital shopping carts.
XPO’s logistics revenues in this quarter amounted to USD 1.58 billion, an increase of 4.6% over the same period in 2019. Strong demand from e-commerce and other consumer-related businesses led to growth which, according to the company, was partially offset by the costs of the pandemic and the withdrawal of XPO from some low-margin companies.
Transport and logistics companies also benefit from the fact that retailers have to replenish their stocks in preparation for the holiday season, when stakes are high, as companies try to rebuild part of the business that was lost at the start of the pandemic. Freight congestion contributes to transport costs and pushes some goods less far into the market than freight transport, where carriers, including XPO, combine the freight of multiple customers into one truck.
The old Dominion freight line..,
Thomasville, N.C., which competes with XPO in the transportation industry, reported a 23% increase in net income for the third quarter to $201.9 million. Adam Sutterfield, the airline’s chief financial officer, is linked to the company during a conference call with investors from 27 to 29 September. In October, growth was driven in part by e-commerce trends, which are bringing more retail-related freight into the system.
XPO expects adjusted EBITDA to reach $400 to $410 million in the fourth quarter and approximately $1.35 billion for the full year.
Write to Jennifer Smith at [email protected].
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