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UPDATE 2-UTi Worldwide Q2 beats on higher volumes, shares jump
September 2, 2010 / 12:46 PM / in 7 years

UPDATE 2-UTi Worldwide Q2 beats on higher volumes, shares jump

* Q2 adj EPS $0.19 vs est $0.17

* Revenue up 37 pct at $1.15 billion

* Says H2 volume growth to moderate on slowing economy

* Shares up as much as 11 pct

Sept 2 (Reuters) - Logistics company UTi Worldwide Inc UTIW.O posted better-than-expected quarterly results, helped by higher volumes as the freight and trucking industry slowly recovers from one of its severest downturns in decades.

Shares of the company, with a market value of $1.42 billion, rose as much as 11 percent to $15.85 but pared some gains and were up 6 percent at $15.16 Thursday late morning on Nasdaq. They have risen about 9 percent in the last 52 weeks.

Air and ocean freight revenue, which together comprise three quarters of the company’s total revenue, rose 55 percent and 48 percent, respectively, in the second quarter ended July 31.

The freight market, which was in recession for about three years, had put pressure on pricing and dented margins at truckers as well as freight brokers. But a slew of truck-operator bankruptcies sucked out excess capacity from the industry, easing margins.

“Air freight and ocean freight volumes continued to grow faster than the market and were higher than volumes recorded in the second quarter two years ago, prior to the financial crisis,” said Chief Executive Eric Kirchner said in a statement.

“Our improved results were primarily driven by strong volumes and better operating margins.”

Research firm Robert W. Baird backed its “outperform” rating on the stock, citing the company’s market share gains, but warned pricing pressure would likely continue.

The Long Beach, California-based company said the revenue growth was tempered by pricing concerns due to continued high transportation rates.

Typically, when carrier rates rise, the company has to pay for the cost and they are not able pass that cost on to customers quickly.

UTi also said it was expecting volume growth to moderate during the second half of the year, citing a slowing global economy.

The outlook is in contrast to the optimistic view for the second half given by rivals CH Robinson (CHRW.O) and Echo Global Logistics (ECHO.O) when they reported better-than-expected second-quarter results.

For the second quarter, net income attributable to the company was $18.9 million, or 19 cents a share, while analysts polled by Thomson Reuters I/B/E/S had expected earnings of 17 cents a share, excluding items. (Reporting by Soham Chatterjee in Bangalore; Editing by Unnikrishnan Nair)

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