News / 'Fantastic' – XPO Logistics chief's delight at Q1 results

A very upbeat Brad Jacobs yesterday announced strong first-quarter growth at XPO Logistics, with net income of $24.9m, following a loss of $19.3m a year earlier.

Revenue rose by $122.6m, after adjusting for the sale of the North American truckload unit in October, to 3.54bn.

“We had a fantastic first quarter,” Mr Jacbos, CEO, told The Loadstar.

“It’s been a strong start to the year, with opportunities ahead. There are lots of different things doing well. Why did it work? Strategy, and execution of that strategy.”

XPO said the star performer of the group was last-mile.

“We built a larger, more focused sales force, including 38 strategic account managers in North America. And we’re in the process of building a similar senior sales organisation in Europe,” Mr Jacobs said in an earnings call.

“We’re also pressing our e-commerce advantage in last-mile and supply chain.

“XPO is established as the number-one provider of outsourced e-fulfilment services in Europe. If a retailer there has plans to grow online sales, we’re almost always asked to bid. We’re winning more e-commerce business in North American supply chains as we transfer best practices and customers from Europe.

“And in Europe, we’re developing verticals such as technology, agriculture and aerospace. These are verticals where we have a lot of experience in North America and it’s opening doors for us in Europe.”

XPO has some $3bn in the sales pipeline, with $1.1bn in supply chain and $1.9bn in transportation. It signed a “record” intermodal contract and also won a large contract to manage new logistics in North America for a global consumer brand. About 50% of its new business is in the US, and the remainder in Europe.

While the company acknowledged the transport market was “lukewarm”, in contrast, contract logistics was “hot” and the industrial sector strong.

“In contract logistics…there is a demanding consumer expectation, driving retailers into changing supply chains and outsourcing to people like us.”

Operating income in the transport sector rose to $100.8m from $75.4m last year. Adjusted EBITDA improved by 13.4%.

Logistics generated revenue of $1.3bn, against $1.26bn last year, while operating income rose from $31.9m to 47.2m. Growth was primarily attributable to a rise in contract logistics in Europe, notably cold chain and e-commerce contracts in the UK, the Netherlands and Italy – a sector “on fire” according to Mr Jacobs.

“About 20% of our freight in last-mile is through our e-commerce network; to co-mingle with the freight network that’s growing very fast,” he added, also noting that cross-selling was strong and that of XPO’s top 100 customers, 87 used more than one service in the quarter.

“In the logistics market … activity is strong globally,” said Scott Malat, chief strategy officer. “Customers seem to be feeling more confident. They’re more willing to commit to projects than we have seen in a while.

“We’re opening a new site every two weeks in North America and at a similar cadence in Europe.”

While global trade has seen an uptick in recent months, Mr Jacobs said the company was not relying on that.

“We are not counting on a good market – there are bright spots and weak spots in the global market. We are not counting on GDP growth.”

XPO will also be laying off the acquisition trail this year and plans no divestments.

“We expect organic growth. The focus is on growing the business that we have got. We will get back to acquiring, but not this year,” said Mr Jacobs.

You can see XPO’s full results here.