XPO weathers economic headwinds in first full year after spin-off

XPO Logistics

European and US trucking giant XPO has achieved creditable results despite the economic headwinds in North America and Europe. Overall operating income was up 16.2% y-o-y to US $438m on marginal revenue growth of 0.3% to $7,744m.

Even in the face of the shaky economy in the US and Canada, the North American LTL segment saw +4.2% growth in daily shipments to 51,322, though revenue per shipment fell 2.9% to $362.38 in 2023. These combined to help the segment’s revenues grow 0.6% y-o-y to $4,671m, though operating profit fell 13% to $542m.

XPO’s CEO Mario Harik said, “In North American LTL we outperformed on every operating metric. This includes fourth quarter yield growth, excluding fuel, of 10.3%, and adjusted operating income of 51%. Our tonnage per day was 2% higher than a year ago”.

In December 2023 the company agreed to acquire 28 service centers from Yellow Corporation, a major rival to XPO that folded earlier in the year. This shows XPO’s resilience as its rivals have struggled in the current macroeconomic environment. Harik said at the time,This acquisition of real estate is a once-in-a-generation opportunity to increase capacity in critical, growing freight markets, create more jobs and serve our customers even more effectively. We look forward to integrating these prime sites to enhance network efficiency and drive our next decade of growth.”

At the same time as the outright success of the North American LTL business, the European Transportation segment has turned a profit after making a loss of $34m in 2022. Where the $15m operating profit on unchanged revenues of $3,073m is relatively small, it shows the company’s overall strategy to cut costs is working.

Looking ahead, XPO’s CEO is positive about the year ahead. Referring to the corporate strategy LTL 2.0, he said “It was gratifying to see our strategy take root in 2023, XPO’s first full year as a standalone company. We’re excited to capitalize on our momentum while laying more groundwork for the year ahead.”

Author: Richard Shrubb

Source: Ti Insights

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