UTi Worldwide reports higher earnings

Forwarding and logistics company UTi Worldwide Inc. reported third quarter net profit of $37.9 million, 8.6 percent more than the $34.9 million in the comparable period last year.

Revenue was $1.21 billion for the fiscal quarter ending Oct. 31, up 3 percent from the $1.18 billion from last year's third quarter.

The company had an improved operating margin and results reflect "the benefits of our cost reduction plan and our ongoing efforts to improve our operating performance," said Roger I. MacFarlane, chief executive officer.

Freight forwarding volumes deteriorated throughout the quarter, particularly in air freight, where growth turned negative for the first time in many years. While part of the air freight weakness was market related, the majority resulted from steps we took to eliminate low yielding business, consistent with our more disciplined approach to net revenue growth, he said.

Yields expanded, offsetting the volume decline and demonstrating the flexibility of our forwarding model. We are also very pleased with the performance in our contract logistics and distribution segment, which produced improved operating margins in the quarter.

We continued to win new logistics business and our surface distribution operations performed exceptionally well, though revenue gains in the quarter were offset by businesses that were shed through our previously announced cost reduction plan, he added.

The company said the revenue increase was primarily due to organic growth in Europe. Acquisitions contributed to revenue growth, but this was more than offset by the exiting of businesses through the company's cost reduction plan and by the impact of the strengthening U.S. dollar.

MacFarlane said, Looking forward, it is difficult to predict the extent to which weakening global economies will impact international trade. We believe our cost reduction plan and reorganization have put us on the right footing.

Source: American Shipper