XPO_Robot_Operator

XPO Logistics resumed its growth trajectory in the final quarter of last year, as investments in technology and productivity began to bear fruit.

The operator reported a fourth-quarter adjusted ebitda of $432m, compared with $380m the previous year.

Group revenue for the quarter, however, was down to $4.14bn, after $4.39bn last year.

Full-year group revenue for 2019 declined to $16.65bn from $17.28bn in 2018, but annual adjusted ebitda, excluding “$49m of restructuring costs, primarily severance, and $5m of transaction and integration costs”, grew to $1.67bn from $1.56bn the year before.

XPO chief executive office Bradley Jacobs said: “We delivered a good fourth quarter, and a good year. I’m particularly pleased that we grew fourth-quarter EPS [earnings per share] by 50% year over year, and adjusted EPS by 56%. We also increased net income by 18% and adjusted ebitda by 14% in the quarter.”

The firm managed to improve profitability in its transport division, despite a decline in fourth-quarter revenue, which came in at $2.6bn, compared with $2.83bn last year.

“The reduction primarily reflects a decrease in freight brokerage and direct postal injection revenue from the company’s largest customer, lower rates in truck brokerage and unfavourable foreign currency exchange, partially offset by revenue growth in last-mile and higher volumes in truck brokerage,” XPO explained.

However, adjusted ebitda for the division was up to $306m from $272m in the fourth quarter of 2018.

“In our less-than-truckload unit, where we have several new technologies in place, the operating ratio was 83.9%, and the adjusted operating ratio was a fourth-quarter record, at 82.3%,” Mr Jacobs said.

Revenues in its logistics arm were flat, at $1.56bn, but adjusted ebitda jumped, from $127m in the last quarter of 2018, to $163m.

“The improvement in adjusted ebitda primarily reflects strong cost discipline, including gains in workforce productivity, increasing traction of the company’s technology initiatives, and pricing optimisation,” the company said.

Mr Jacobs added: “In truck brokerage, we increased volume year over year, with lower headcount, propelled by our XPO Connect digital platform. Our technology also helped our logistics segment generate a double-digit adjusted ebitda margin in the quarter for the first time since 2015.”

“In 2020, we’ll continue to focus on maximising shareholder value, while remaining intensely committed to the satisfaction of our customers and employees,” he said.

It further reiterated previous guidance on the ongoing strategic review, which includes “the possible sale or spin-off of one or more business units”, and although nothing has yet been determined, it has ruled out the disposal of its North American less-than-truckload unit

Notwithstanding the possible effects of these, it forecast a 3-5% organic revenue growth in 2020 and an adjusted ebitda growth of 7-10% to $1.785bn-$1.835bn.

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