02 February 2010

Revenue growth in the Transportation segment is anticipated to be limited in 2010

C.H. Robinson Worldwide saw its fourth-quarter (Q4) 2009 profit slide 1.3%, from US$88.9 million in Q4 2008, to US$87.7 million. Total revenues increased 2.7%, to US$2.0 billion, in the fourth quarter of 2009 compared to the fourth quarter of 2008. The Company reported that trends of margin compression and accelerating volume growth in its North American Truckload service during Q4 2009 have continued into January 2010. On a per business day basis, total net revenue in January was roughly flat. However, despite continued volume growth, the Company anticipates margin comparisons to be continually challenging.

In Q4 2009, Transportation revenue was flat, driven by falling transportation rates offset by volume increases in many of the Company’s transportation modes. Transportation rates declined primarily due to decreased pricing to customers and a reduction in fuel prices.

The Company’s Sourcing revenues increased 16.0% in Q4 2009, primarily due to the previously announced acquisition of Rosemont Farms, Inc. on 15th September 2009 and volume growth. Information Services revenues increased 0.8% in the same period, due to an increase in transactions offset by declines in some fees that are impacted by fuel prices.

Total Transportation net revenues decreased 4.0%, to US$293.8 million, in the fourth quarter, from US$306.0 million in the fourth quarter of 2008. Transportation net revenue margin decreased to 18.3% in 2009, from 19.0% in 2008, largely driven by decreased customer transportation rates.

Truck net revenues, which consist of truckload and less-than-truckload (LTL) services, decreased 2.3% in Q4 2009. Truckload volumes increased approximately 13.0%, compared to Q4 2008. Truckload net revenue margins decreased due to declining transportation rates compared to Q4 2008. Excluding the estimated impacts of the change in fuel, on average the Company’s truckload rates to its customers decreased approximately 6.0% in Q4, compared to the year ago period. LTL net revenues increased due to volume gains, largely offset by price declines and decreased net revenue margin.

Intermodal net revenue decrease of 26.7% in Q4 was driven by price declines, which decreased the net revenue margin. This decline was offset slightly by volume increases.

Sea Transportation net revenues decreased 27.0% in Q4 2009, driven by decreased volumes and price declines. Excluding the previously announced acquisition of Walker Logistics Overseas Ltd. on 12th June 2009, C.H. Robinson’s sea transportation net revenues would have declined approximately 29.0%.

Air transportation net revenue increased 1.2% in Q4 2009. Excluding the Walker acquisition, Air Transportation net revenues decreased approximately 10.0%.

Miscellaneous Transportation net revenues consist primarily of transportation management fees and customs brokerage fees. The increase of 17.7% was driven by an increase in management fees as well as the previously announced acquisition of International Trade & Commerce, Inc. (ITC) on 7th July 2009, offset partially by a decrease in other customs brokerage activity. Excluding the acquisition of ITC, Miscellaneous Transportation net revenues increased approximately 9.0% in Q4 2009.

For the fourth quarter, Sourcing net revenues increased 27.0%, to US$33.1 million in 2009, from US$26.1 million in 2008. Excluding the previously disclosed acquisition of Rosemont, Sourcing net revenues increased approximately 3.0% in Q4 2009.

Information Services revenues increased 0.8% in the fourth quarter of 2009, driven by an increase in transactions offset by declines in some fees that are impacted by fuel prices.

For the fourth quarter, operating expenses decreased 2.7%, to US$196.3 million in 2009, from US$201.8 million in 2008. This was due to a 3.6% decrease in personnel expenses and a 0.2% decline in other selling, general, and administrative expenses. As a percentage of net revenues, total operating expenses decreased slightly to 57.9% in Q4 2009, from 58.6% in the comparable year ago period.