News / Industry 'tailwinds' a 2021 fillip for XPO Logistics after record Q4

Surging fourth-quarter volumes and road freight rates brought XPO Logistics revenue and profit growth, but failed to offset a full-year decline. 

The company said Q4 revenue increased 12.8% year on year, to $4.67bn, while adjusted ebitda grew 3.9%, to $449m. However, full-year revenue fell 2.4% to $16.25bn  and adjusted ebitda was down 17.6%, to $1.4bn. 

Chairman and chief executive Brad Jacobs said: “Our fourth-quarter revenue, earnings and free cash flow were all much better than expected.  

“The investments we made in our people and technology in 2020 helped us to generate the highest revenue of any quarter in our history.  

“We also doubled our truck brokerage net revenue year over year and we improved our fourth-quarter LTL adjusted operating ratio, excluding real estate gains, for the sixth straight year,” he said. 

XPO’s transport division generated $2.94bn in Q4 230, compared with $2.6bn in the same period in 2019, and an adjusted ebitda of $331m, compared with $306m the year before, largely due to “higher profitability in truck brokerage and in LTL, with gains from LTL real estate sales excluded”. 

Its contract logistics division, expected to be spun-off as a separately listed company this year, earned revenues of $1.76bn in the fourth quarter, compared with $1.56bn in 2019 “led by strong demand from e-commerce and other consumer-related verticals, partially offset by Covid-related impacts”. 

However, contract logistics’ adjusted ebitda dropped 6.7%, year on year, to $152m, “primarily related to a spike in labour costs due to record e-commerce peak demand, as well as start-up costs for new contracts won, partially offset by higher revenue from contracts won in prior periods”.  

Nonetheless, XPO issued guidance for 2021 of a full-year adjusted ebitda of $1.72bn-$1.8bn, which would mean an annual growth in profits of 24%-29%. 

“The industry’s biggest tailwinds are at our back in 2021 — e-commerce fulfilment and returns, supply chain outsourcing and fast-growing customer demand for our digital capabilities,” Mr Jacobs added.