XPO Logistics: European Contract Logistics Drove 2Q17 Revenues
XPO’s 2Q17 revenues
In 2Q17, XPO Logistics (XPO) registered quarterly revenues of $3.76 billion, a 2.2% rise from $3.68 billion in the second quarter last year. In contrast, Wall Street analysts estimated revenues of $3.67 billion. XPO surpassed analysts’ revenue estimate by 2.3% in the second quarter of 2017. The company’s revenues rose 7.5% organically in 2Q17, excluding the divestiture of its North American truckload unit and the impact of fuel and currency translations.
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Reasons behind 2Q17 revenue growth
The 2Q17 revenue growth was driven by the expansion of XPO’s European contract logistics business. In addition, the less-than-truckload weight per day rose in the high single digits. The company’s North American brokerage operations recorded growth in the high teens, whereas the Last Mile revenue rose in the mid-teens.
The rise in 2Q17 revenues was negatively offset by the sale of its North American truckload operations with revenues of $133.4 million in 2Q16. The negative impact of currency translations resulting from a strong US dollar in 2Q17 also affected revenues in the reported quarter.
XPO Logistics primarily operates in two segments: Transportation and Logistics. The company’s Transportation vertical contributes ~65.0% of pro forma gross revenues, including the impact of acquisitions. The Logistics division accounts for ~35.0% of pro forma gross revenues.
Peer group’s 2Q17 revenues
The freight volume scenario has improved in 2017 for transportation companies. The companies that operate in the truckload (XLI) sector could see an expansion in its top lines going ahead. On a sequential basis, XPO’s revenues rose 6.2% in the second quarter of 2017 compared to 1Q17.
However, it’s worth noting that XPO rose primarily because of acquisitions. So its organic growth assumes more importance. Changes in its peers’ 2Q17 revenues compared to 2Q16 are as follows:
- B. Hunt Transport Services (JBHT): $1.7 billion, a 6.8% rise
- Old Dominion Freight Lines (ODFL): $840.0 million, a 11.2% rise
- YRC Worldwide (YRCW): $1.3 billion, a 4.4% rise
- Saia (SAIA): $358.2 million, a 14.8% rise
In the next part of this series, we’ll look at XPO Logistics’ Transportation segment revenues in 2Q17.