The New Robinson – expert at playing the markets
From reactive to proactive
© Timon Schneider
By Alex Lennane
CH Robinson has cited retail weakness for a disappointing set of third-quarter results that cemented its reputation as an overland operator, while its global forwarding division struggled.
It saw total revenues in the third quarter fall 4% year on year, to $6bn, which it said was “driven primarily by lower ocean and air pricing”; but this was partially offset by higher pricing in LTL and truckload.
Gross profit increased 5%, to $880.7m, but operating expenses rose 12.5%, to $599.6m, as its headcount grew 13%. Net income was $225.8m, down 8.6% from a year ago, and income from operations was $287.6m, down 7.5%.
“On our second-quarter earnings call in late July, I talked about a deceleration in demand we expected to see in the second half of 2022 in three large verticals for freight, including weakness in the retail market and further slowing in the housing market,” said CEO Bob Biesterfeld.
“We’re now seeing those expectations play out, with slowing freight demand and price declines in the freight forwarding and surface transport markets.”
Its North American Surface Transportation division saw income from operations rise 42.2%, year on year in Q3, while for the nine months, it rose 53.5%, to $670.7m.
Source: CH Robinson
However, global forwarding saw declines: a 48% fall in income from operations in Q3, to $85.9m, on a 23% fall in revenues. Its nine-month year-on-year changes were better: revenues rose 26.5%, to $6.7bn, while income from operations increased 15.7%, to $421m.
“Today, we believe we are entering a time of slower economic growth, where freight markets will continue to cool from their peaks and will operate more reliably and at more normalised rates, with fewer disruptions,” added Mr Biesterfeld.
“These changes in market conditions, coupled with many successful endeavours on our digital roadmap, directed at scaling our model to be more efficient, are allowing us to take actions to structurally reduce our overall cost structure.”
He said the company was cost-cutting to the tune of $175m, on an annualised basis, by the fourth quarter of next year, although he expected inflation to add $25m to costs.
Mr Biesterfeld added: “Throughout the changes in the freight cycle, we have maintained our focus on continuing to improve the customer and carrier experience and scaling our digital processes and operating model to foster sustainable, profitable growth.”
Meanwhile, CH Robinson is promoting Arun Rajan to chief operating officer, from chief product officer, to accelerate its digital and product strategy and “drive greater impact”. Mr Rajan has only been with CH Robinson since August 2021, after two years as CTO for Whole Foods Market. He will have direct responsibility for technology and marketing.
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