UPS - Inflation Tempers Cargojet's Outlook Despite Q1 Volume Growth | Benzinga
Cargojet (OTC: CGJTF) reported Tuesday that revenue of US$169 million was nearly flat year over year, while adjusted earnings excluding accounting measures and taxes ticked up 3.6% to $57 million, in line with analysts' expectations.
The company said less hesitancy among consumers to make online purchases helped drive up flying revenue — divided among its core domestic network, dedicated contract flying for other airlines and all-in charter services — by 6.5% to $132.4 million. The gains were offset by lower fuel surcharges as the price of jet fuel came down in the past year.
Cargo airlines typically see better results in the second half of the year as importers and exporters ramp up goods movement for the holiday shopping season and year-end financial targets, but management offered a conservative outlook as high prices for goods and services weigh on Canadians' purchasing power.
"On the domestic side, the volumes from our major customers have stabilized and improved sequentially each quarter since the middle of last year" said co-CEO Jamie Porteous during an earnings presentation for analysts. "Given the macroeconomic environment of persistent inflation, and high interest rates, a much greater portion of household income is still being spent on borrowing costs, leaving a smaller portion for discretionary spending. As a result, we do not expect significant growth to return until financial conditions ease ...