Ryder’s logistics divisions have reported buoyant revenue growth on the back of new business wins, although profitability has not risen in concert.
In the Supply Chain Solutions (SCS) business segment, total revenue was up 10% to $495m and SCS operating revenue (revenue excluding fuel and subcontracted transportation) was up 6% to $383m compared with the year-earlier period. SCS total revenue growth reflected higher operating revenue and subcontracted transportation revenue. SCS operating revenue growth largely reflected new business.
However, earnings before tax of $26.2m were down 7% year-on-year. Ryder asserted that this reflected an unusually strong quarter in the prior year. First quarter results were driven by lower volumes primarily in the automotive business, as well as ongoing lower performance in one customer account. These impacts were partially offset by earnings on operating revenue growth in CPG/Retail and Technology/Healthcare and lower insurance costs.
SCS earnings before tax as a percentage of SCS total revenue and SCS operating revenue were 5.3% and 6.8%, respectively, both down 90 basis points from the prior year.
In the Dedicated Transportation Solutions (DTS) business segment, total revenue was up 12% to $299m and DTS operating revenue was up 4% to $201m compared with the year-earlier period. DTS total revenue growth reflected higher subcontracted transportation revenue and operating revenue. DTS operating revenue growth reflected increased volumes and new business.
DTS earnings before tax of $13.1m increased 16% compared with $11.3m in 2017, due to revenue growth and operating performance, as well as favourable developments related to self-insurance claims from prior years. DTS earnings before tax as a percentage of DTS total revenue and DTS operating revenue were 4.4% and 6.5%, respectively, up 20 and 70 basis points from the year-earlier period.
Commenting on the Company’s first quarter results, Ryder Chairman and CEO Robert Sanchez said, “Our results were at the high-end of our expectations in the first quarter, driven by stronger than expected results in our rental, supply chain, and dedicated businesses. Rental demand continued at a very robust level, with first quarter utilization at the highest level in a decade. These improvements were partially offset by lower than expected results in used vehicle sales.”
He added: “We recently announced several strategic initiatives to further capitalize on the disruption we are seeing in the market and to drive long-term growth for the business. We acquired MXD Group earlier this month to leverage significant growth opportunities in e-commerce and expand Ryder’s omni-channel fulfillment capabilities, including final mile services. Additionally, in the Atlanta market we launched COOP by Ryder, the first asset sharing platform of its kind for commercial vehicles, which enables fleet owners to generate revenue from their underutilized vehicles and provides a future asset-light earnings source for Ryder.”
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