C.H. Robinson Shares Fell 10% Wednesday

The company’s fourth-quarter earnings per share, announced Tuesday, were slightly lower than what analysts were expecting—and its CEO acknowledged that C.H. Robinson is off to a slow start this year in its North American trucking logistics business.

Shares of Eden Prairie-based transportation and logistics company C.H. Robinson Worldwide, Inc., dropped nearly 10 percent Wednesday, a day after the company released its fourth-quarter and full-year 2012 financials and discussed some challenges that lie ahead.
Shares of C.H. Robinson closed down 9.7 percent at $60.50 on roughly six times typical volume, and the decrease was reported to be the largest daily drop among Standard & Poor’s 500 companies. As of early Thursday afternoon, shares were trading down about 1.4 percent at $59.64. But just last week, they were trading in the $67 range.
C.H. Robinson’s fourth-quarter net income more than doubled, increasing to $256.4 million, or $1.58 per share, from $109.2 million, or 67 cents per share, during the same period of 2011. Excluding the impact of acquisitions and divestitures, adjusted earnings increased 68 percent—2 cents short of the expectations of analysts polled by Thomson Reuters. Revenue, meanwhile, rose 16 percent to $2.97 billion—beating Wall Street expectations of $2.87 billion.
But C.H. Robinson CEO John P. Wiehoff told investors in a fourth-quarter earnings call on Wednesday that the company’s North American trucking logistics business, which constitutes a major part of its operations, finished “very poorly” in December and “began very weak” in January, from both a volume and margin standpoint. Although he acknowledged that such activity typically picks up throughout the first quarter, and the most important period in the quarter is yet to come, he also cautioned that the company faces some difficulties.
“[I]n terms of growing our revenues and market presence at a greater rate than we’ve been able to grow our earnings the last couple of years, net revenue margin compression continues to be the core topic that we’re challenged with,” he told investors.
But Wiehoff also highlighted the fact that transportation revenues—which encompass truck, intermodal, ocean, air, and other logistics services—rose 14.1 percent in the fourth quarter. Additionally, he pointed to a couple of recent acquisitions that are expected to help the company boost market share in the months ahead.
Late last year, C.H. Robinson bought two freight services companies—Poland-based Apreo Logistics, S.A., for an undisclosed sum, and Chicago-based Phoenix International, Inc., for $635 million. Apreo Logistics, which has a significant number of short-haul shipments in Poland, already helped boost truckload volume 12 percent in the fourth quarter and contributed to trucking revenue increasing 7.1 percent during the period.
For the full 2012, C.H. Robinson’s net income rose 37.6 percent to $593.8 million, and revenue increased 9.9 percent to $11.4 billion. The company is among Minnesota’s 15-largest public companies based on revenue.
According to the Star Tribune, at least two C.H. Robinson analysts cut their profit outlook for 2013, citing increased competition and lack of “near-term evidence of improvement.” To read more about analysts’ reactions to the company’s recent performance and prospects in that report, click here.