News / XPO overcomes weak market to post strong Q4 earnings

American road freight operator XPO today posted 6% year-on-year revenue growth for the fourth quarter of last year, despite market challenges faced by the haulage industry.  

The haulage industry has been facing rising overhead costs, driver shortages and reduced demand, which has led to many insolvencies, particularly in the UK and the US. 

XPO said its results “reflect a strong performance in a soft industry environment for freight transportation”. 

Fourth-quarter revenue was $1.94bn, compared with $1.83bn for the same period in 2022, and adjusted ebitda was up 28% to $264m.

XPO attributed the increased revenue to higher yields, excluding fuel, and an increase in daily tonnage in the North American less-than-truckload (LTL) segment, which was partially offset by lower fuel surcharges. 

Tonnage per day in North American LTL was up 2%, with nearly 6% more shipments a day, producing a 10.3% growth in yield, excluding fuel. LTL operating income increased 51%, to $160m, with adjusted ebitda for the period at $233m. 

Net income from continuing operations in Q4 was $58m, a huge increase after a net loss of $36m in the same period in 2022. XPO chief executive Mario Harik described the results as “solidly above expectations.” 

XPO generated $251m in cash flow from operating activities, ending the quarter with $412m in cash and cash equivalents.  

Its European operations saw revenue at $753m and an operating loss of $2m, compared with a loss of $60m in Q4 22. Adjusted ebitda in Europe was $36m, compared with $39m in 2022.  

The quarter also saw corporate overheads reduced by $60m, due to decreased transaction, integration and restructuring costs. 

XPO MD for UK and Ireland Dan Myers previously told The Loadstar: “It’s not a high-margin industry, you’ve got to work incredibly hard to make a reasonable return when the economy is not great.” 

On its earnings conference call today, XPO said its contract renewal pricing was up year on year by 9%. Chief strategy officer Ali Faghri said: “We’re seeing very strong pricing trends as we enter 2024. For the first quarter in particular, we would expect our yield to be up somewhere in a similar range to what we just delivered here in the fourth quarter, so call it roughly about 10% growth. 

“On a full-year basis, we would expect yield to be up somewhere in that mid-to-high single-digit range. There is certainly a path to do better than that, it’s still very early in the year. 

“Overall, we feel very good about the yield outlook in 2024, and we expect it to be a strong year for us,” he concluded.