Expeditors reports strong Q3 growth in revenue and profitability 04 November 2014

Double digit growth in both air and ocean volumes for first time since Q4, 2010

Expeditors International of Washington has reported net earnings attributable to shareholders of US$102.4 million for Q3, 2014, as compared with US$92.4 million for Q3, 2013, an increase of 11.0%. Net revenues for Q3, 2014 increased 6.0% to US$513.3 million, as compared with US$484.9 million for Q3, 2013. Total revenues and operating income were US$1,705.1 million and US$159.1 million in Q3, 2014, as compared with US$1,538.0 million and US$146.3 million for Q3, 2013, increases of 11.0% and 9.0%, respectively.

For the nine months ended September 30, 2014, net earnings attributable to shareholders was US$277.5 million, as compared with US$265.0 million in 2013, an increase of 5.0%. Net revenues for the nine months increased to US$1,462.6 million from US$1,404.8 million for 2013, up 4.0%. Total revenues and operating income for the nine months were US$4,795.9 million and US$436.8 million in 2014, as compared with US$4,454.4 million and US$418.4 million for the same period in 2013, increases of 8.0% and 4.0%, respectively.

Double digit growth in both air and ocean freight volumes in Q3 is something that the Company has not seen since Q4, 2010. This resulted in double digit revenue growth and drove double digit net income growth. Firmer ocean pricing offset tightening margins in air freight while customs brokerage and other services benefited commensurately with air and ocean volume increases.

The Company experienced strong operating income growth in both the US and Europe regions, which again compensated for relative weakness in the Asia Pacific and Middle East and India regions. Operational efficiency was highlighted by the Company’s ability to service double digit volume growth while expanding operating income as a percentage of net revenue to 31.0%. Cash flow from operations, while down slightly year-over-year, was still very strong at nearly US$87.0 million.

Looking ahead, while heartened by the strength of ocean freight in Q3, so much of how Q4 will turn out will depend on circumstances that are still playing out in the air freight markets. Air freight pricing is still very volatile. New product launches and increases in global demand certainly played out well in Q3, though Q4, with less seasonal ocean freight and more air freight emphasis, has many more dynamics to manage.