C.H. Robinson hits its goals despite pressure on truckers

  • Article by: STEVE ALEXANDER
  • Star Tribune
  • July 24, 2012 - 8:51 PM

Logistics company C.H. Robinson nailed its second-quarter earnings and revenue targets despite a tough economy in the trucking industry that doesn't show signs of improving.

Robinson, which matches shippers with transportation companies, said second-quarter profit increased 3.2 percent to $114.6 million, or 71 cents a share, from a year earlier, meeting analysts' expectations.

Revenue increased 9.2 percent to $2.96 billion, slightly beating a consensus analyst estimate of $2.9 billion.

For the six months ended in June, earnings were $221.1 million, up 6.3 percent, on revenue of $5.5 billion, up 8.6 percent.

CEO John Wiehoff said the company's net revenue margin -- the difference between what it charges shippers to haul their freight and what it pays transportation companies to carry the goods -- is under pressure. Truckers are raising their freight prices because shipping capacity is tight, but shippers haven't been willing to pay more for transportation, he said.

"This margin-compression cycle has been longer and more significant than we anticipated," Wiehoff said.

Matt Young, an analyst with Morningstar in Chicago, said the good news for Robinson is that the company is definitely taking market share from competitors and that "underlying demand for freight transportation and for third-party logistics firms like Robinson is, while not great, at least stable."

The bad news is that Robinson "is in a market environment where they are just getting squeezed," Young said. "They are working hard to get volume, and they're getting it. But it's hard for them to get as much financial gain on the business as they used to."

While Robinson gets points for execution, it faces an uphill road, said Ben Hartford, an analyst at Robert W. Baird & Co. in Milwaukee.

"The company is executing well, as evidenced by the above-market volume growth in their core trucking business," Hartford said. "But the market dynamics are challenging, and Robinson's profit per load is being pressured because industry shipping volumes are stable, if not weak. In addition, there is arguably more competition for Robinson today than there has ever been."

Steve Alexander • 612-673-4553

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