XPO profit falls less than expected after reduced business

(Reuters) - XPO Logistics Inc, one of the world’s largest global transport and warehouse companies, reported on Wednesday a smaller-than-expected drop in quarterly profit after it lost $600 million in business from its top customer - widely believed to be Inc.

Connecticut-based XPO disclosed in February that its largest customer canceled two-thirds of its business with the company, forcing it to cut its 2019 profit forecast for the second time in two months.

Current and former XPO employees as well as industry insiders have told Reuters that the customer was Amazon, which is spending billions of dollars to build its own transportation infrastructure to contain swelling shipping costs. XPO and Amazon have declined to comment.

XPO refocused and booked $1.1 billion in new business during the first quarter, which will be layered in over 12 to 18 months, Chief Executive Bradley Jacobs told Reuters on Wednesday.

“We’re feeling good about how we’ve rebounded from that loss,” Jacobs said.

Shares were up a scant 0.2 percent to $67.25 in after-hours trading, after XPO forecast less robust growth from North America and Europe this year. The stock remains well off its 52-week high of $116.27.

XPO’s first-quarter net income attributable to common shareholders fell 36 percent to $43 million for the quarter, or 37 cents per share, versus a year earlier.

Excluding items, XPO earned 51 cents, significantly better than analysts’ average estimate of 39 cents, according to Refinitiv data.

First-quarter revenue slipped almost 2 percent to $4.12 billion.

Revenue in its transportation segment fell 4 percent to $2.66 billion after it bore the brunt of Amazon moving so-called postal injection services in-house. That business involved XPO picking up goods in the evening, packaging them for shipment to consumers and dropping the parcels with the U.S. Postal Service the following morning.

XPO said it had stopped providing postal injection services after losing almost all that business.

First-quarter logistics unit revenue rose more than 3 percent to $1.49 billion, helped by growth in e-commerce, food and beverage, consumer packaged goods and aerospace.

Reporting by Lisa Baertlein in Los Angeles; Editing by Peter Cooney