C.H. Robinson Worldwide ( NASDAQ: CHRW ) stock declined sharply in Wednesday’s extended trading after posting wide misses on top and bottom lines for the fourth quarter.
The Minnesota-based trucking company notched $1.03 in earnings per share, well short of the $1.34 expected by analysts. Meanwhile, a surprisingly steep 21.5% decline in revenue from Q4 2021 to $5.1B came in $490M below Street estimates. Transportation revenue was a sore spot in particular, as a 23.2% decline in segment revenue to $4.8B missed expectations by more than $1.2B. Adjusted operating margin decreased 12.2% year over year to 21.4%.
“The current point in the cycle is one of shippers managing through elevated inventories amidst slowing economic growth, causing unseasonably soft demand for transportation services. At the same time, prices for ground transportation and global freight forwarding are declining due to the changing balance of supply and demand,” Interim CEO Scott Anderson explained. “While a correction in the freight forwarding market was certainly expected, the speed and magnitude of the correction in only two quarters was unexpected, with ocean rates on some trade lanes already back to pre-pandemic levels.”
On guidance for the full year, Anderson indicated that macro pressures are likely to linger for a number of quarters. As such, he highlighted the need for the trucking company to tighten its belt.
"As inflationary pressures continue to weigh on global economic growth and freight markets present cyclical challenges, we need to continue evolving our organization to bring greater focus to our highest long-term strategic priorities, including keeping the needs of our customers and carriers at the center of what we do while lowering our overall cost structure by driving scale,” Anderson stated. “We expect this initiative will continue to drive improvements in our customer and carrier experience and amplify the expertise of our people, all of which we believe will drive market share gains and growth. We expect these efforts will also improve our productivity, which will reduce our operating costs and lead to improved returns for our shareholders.”
Anderson joined the company as interim CEO in early January after the departure of former CEO Bob Biesterfield at the close of 2022 . A search for a permanent CEO remains underway.
Shares of C.H. Robinson Worldwide Holdings ( CHRW ) drove 4.28% lower in after hours trading on Wednesday.
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C.H. Robinson stock slumps on big earnings miss