The third-party logistics provider saw its net profits drop despite revenues increasing 12.8 percent as it absorbed debt and expenses from recent acquisitions.
Net profits fell for the Minnesota freight broker as it absorbed debt from two recent acquisitions.
C.H. Robinson’s net income for the third quarter of 2017 totaled $119.2 million, dropping 7.6 percent from the second quarter of 2017, according to the company’s latest financial statements.
The Eden Prairie, Minn.-based third-party logistics provider’s total revenues rose 12.8 percent year-over-year to $37 billion, due to increased pricing and volume growth across all transportation services. The company’s earnings per diluted share dropped 5.6 percent to $0.85 compared to $0.90 per share in the same period in 2016.
C.H. Robinson acquired APC Logistics at the close of business on Sept. 30, 2016, representing 2 percent of total net revenues in the third quarter of 2017. Previously C.H. Robinson also acquired Milgram & Company Ltd. on Aug. 31, 2017, “for the purpose of expanding our global presence and bringing additional capabilities and expertise to our portfolio,” the company said.
As a result of these acquisitions, total operating expenses increased 15 percent compared to the third quarter of 2016, while personnel expenses increased 14.1 percent due to an increase in average headcount of 8.7 percent and an increase in variable compensation in the third quarter of 2017. Other selling, general, and administrative expenses increased 17.6 percent, the company said, due to acquisition costs and taking on debt, claims expenses and warehouse costs from the two deals.
C.H. Robinson’s three operating segments saw mixed results for the quarter, with its North American Surface Transportation (NAST) segment total revenues increasing 9.6 percent to $2.5 billion and truckload net revenues dipping 2.1 percent to $266.6 million compared to the same period in 2016. Truckload volumes were flat and the segment’s net revenue margin decreased due to transportation costs rising faster than truckload pricing, the company said. NAST’s intermodal net revenues decreased 1.4 percent to $7.1 million due to contractual volume growth, partially offset by a decrease in transactional business.
The company’s Global Forwarding segment saw total revenues increase 41.3 percent to $552.1 million in the third quarter of 2017 thanks primarily to the acquisition of APC and Milgram. Ocean net revenues increased 44 percent to $81.1 million, also driven by the acquisitions.
The Robinsnon Fresh segment saw total revenues increase 3.9 percent to $613.6 million. Sourcing net revenues were flat and transportation net revenues dropped 10 percent to $24.5 million in the third quarter of 2017.
Looking ahead, C.H. Robinson said it will focus on the Milgram integration, operation expense control and account management discipline in the fourth quarter. The company expects price volatility to continue into 2018.