CIRCLE POSTS 35% PROFIT GROWTH
Circle International, the San Francisco-based international freight forwarder being acquired by EGL Inc., said net income in the second quarter jumped 35 percent to $6.5 million.
Circle cited the absence of Y2K expenditures as a reason for the sharp profit increase. However, solid revenue growth will give EGL and Circle some momentum in the second half of the year. Gross sales at Circle rose 21 percent to $237 million, with growth coming in all regions of the world and across all of Circle’s service lines.
Revenue from air freight, ocean freight and customs brokerage rose 19 percent, 32 percent and 21 percent, respectively. Air freight sales accounted for 63 percent of Circle’s business. Revenue from the Americas; Europe and the Mideast; and Asia and the South Pacific regions increased 7 percent, 17 percent and 45 percent, respectively. Circle’s Americas division accounted for 40 percent of sales.
Net revenue, or sales minus the direct cost of transportation, increased 12 percent to $91.1 million. Margins were lower than last year due to higher transportation costs from carrier rate increases, Circle said. A fuel surcharge helped recover some of the cost.
“We are most encouraged with our solid double-digit growth, which demonstrates not only our progress securing additional business from existing clients, but also our continued success bringing new clients into Circle,” said Peter Gibert, Circle’s interim chairman and chief executive officer.
For the first six months of the year, net income rose 45 percent to $9.7 million. Revenue was up 20 percent at $453.2 million, and net revenue increased 12 percent to $175.8 million.
EGL and Circle expect to close their merger transaction this fall, after winning approval by U.S. regulators this week.