C.H. Robinson reported improved pricing and freight volume, driving second-quarter results above analyst expectations, and said it expects the current freight market to remain strong for the rest of the year.
“We believe that the current freight market fundamentals will remain in place for the remainder of the year,” said John Wiehoff, chairman and chief executive of C.H. Robinson, in a statement. “With a healthy economy, demand for freight will remain strong.”
C.H. Robinson’s net profit increased more than 40 percent to $159.2 million, or $1.13 per share. Revenue rose 15.3 percent to $4.3 billion for April, May and June.
“Both pricing and volume trends improved across most of our service lines in the second quarter,” Wiehoff said. “Combined with the benefits of U.S. tax reform, our strong performance enabled us to increase our operating cash flow by nearly 90 percent and increase our cash returns to shareholders by nearly 30 percent in the quarter.”
For the quarter, C.H. Robinson reported an effective tax rate of 25.6 percent compared with 35.6 percent in the second quarter of 2017. The company quantified the tax benefit at $18.4 million for the quarter and $35.5 million for the first half of the year.
The EPS and revenue numbers both exceed the consensus estimates of analysts tracked by Thomson Reuters. Analysts expected the Eden Prairie-based third-party logistics company to earn $1.06 per share on sales of $4.184 billion.
A report on the transportation industry by Zacks Equity Research shows that an improving global economy with increasing demands for shipping is helping shippers and logistics providers by allowing them to charge higher freight rates but higher oil costs and rising wages loom as a threats to margins going forward.
Addressing analysts on the company’s earnings conference call Wednesday, Wiehoff also said truck driver shortages represent a lingering issue and that they are monitoring the tariff situation.
“The current tariffs that are in place did not have an adverse impact on our first-half financial results. Our primary focus has been to work with our customers to help them understand and quantify the impacts or potential impacts of some of the proposed tariffs,” Wiehoff told analysts. “While the cost of the tariff is ultimately borne by the shipper, our business could be negatively impacted by any resulting slowdown in global trade or redesigning of global supply chains.”
C.H. Robinson released its earnings after the market closed on Tuesday and held its conference call to discuss results with analysts on Wednesday morning.
Shares of C.H. Robinson are up 3.5 percent for the year. They closed Wednesday at $95.38, up 3.4 percent.