There may be some glimmers of hope on the global economic horizon, but they are too early to affect the bottom line of UTi Worldwide, a major provider of global logistics services.
UTi on June 4 reported even bleaker news than expected about its fiscal 2010 first quarter, which ended on April 30. Battered by lower-than-expected freight and logistics volumes, UTi’s revenue dropped 35 percent, compared to the same period last year, to $768.4 million. Its net revenue fell 21 percent to $309.5 million; its operating income dropped 25 percent to $17.9 million; and its net income fell to $9.8 million, compared with $13.5 million.
Chief Financial Officer Lawrence Samuels said the company would have reported significantly higher operating margins if not for the strong U.S. dollar. The company was also affected by the especially weak economic performance of Germany, the Netherlands and the U.K., where it has major operations.
There were some bright spots: Operating expenses during the quarter fell 20 percent to $291.7 million from a year earlier. CEO Erich W. Kirchner, attributed that improvement in part to cost-reduction initiatives, including the closing of some operations. Kirchner said UTi would continue to cut costs and intensify its sales efforts to improve revenue growth, particularly in forwarding.
“These efforts may take some time, but we remain fully committed to our goal of achieving long-term growth and margin improvement,” Kirchner said. Beyond that, the African market, where UTi is a major player, “performed very well,” Samuels said.
He said UTi would not be affected significantly by the bankruptcies of General Motors and auto parts supplier Visteon, two of its customers. “Most of our business with these two companies is outside the U.S.,” he said, and those activities will continue as planned.
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