Expeditors’ first quarter earnings level off

Has the slide ended for Expeditors? Judging from first quarter’s earnings report, the worst may be over for the company.  In fact, commenting on first quarter earnings, CEO, Pete Rose said, "There is a certain stability in these quarterly results that may not be as apparent on the surface as they were re-assuring to us here. We had a strong finish in March and after having swum in deep waters for so long, it's somewhat invigorating to feel that your feet might actually be touching ground.”

While not impressive, there does seem to be some stabilization. Revenue for first quarter was $1.4bn, reflecting no change from first quarter 2012. Net revenues decreased slightly, 0.3%, to $445m.

While total air freight revenues declined 3.0% to $620.4m, if airfreight consolidation expenses are subtracted out, total air freight revenue declined 1.5%. This may due to lower air freight rates compared to first quarter 2012. The company also noted a nice increase in air volumes for January, up 16% however, February and March volumes declined resulting in a first quarter increase of 0.4%. Still, it was positive news. Mr. Rose pointed out this was indeed positive news despite the “well-publicized slide in global PC shipments, historically a large part of our tech business”.

Different news for ocean freight however, as total revenues increased 2.5%. But, factoring in ocean freight consolidation expenses, ocean freight revenue actually declined 1.8%. Expenses increased almost 4.0% during the quarter which shows the ocean freight market remains volatile. Meanwhile, volumes declined each month during the quarter and ended the period down 4.0%.

And finally, the customs brokerage group continues to report good gains. For the quarter, total revenue increased 1.9%. Include expenses and the group’s revenue was still positive, up 1.6%.

Geographically, Asia Pacific and “Other North America” continues to be bright spots for Expeditors. Net revenues increased 2.8% and 6.9% respectively. Meanwhile, Europe’s economic woes continues to weigh on that group’s revenues  with a 1.3% decline in net revenue and 2.1% decline in total revenue. And it looks as if the Middle East and India group may be problematic with net revenue declining 5.5% and total revenue declining slightly by 0.3%. It’s unclear what is transpiring within this region, perhaps infrastructure expansion?

While first quarter earnings did not improve as much as hoped for it does appear the slide may be leveling off a bit. With second quarter underway, the company appears a bit more optimistic that improvements will continue.