TransForce, the Canadian trucking and parcels group buying the DHL Express domestic business inthe country, grew strongly in the first quarter of 2011 and is open for more parcels deals,
especially in the USA.In the January – March 2011 first quarter, the group increased revenues by 20% to C$561 millionand improved its operating profit by 35% to C$24.4 million. This was a 4.3% profit margin. Its Q1adjusted profit more than doubled to C$12.2 million.
Package and Courier revenue (before fuel surcharges) rose 64% to C$135.6 million, mainlyattributable to a $45-million contribution from US express company Dynamex and, to a lesser extent,to volume increases from Canpar and ATS. Total revenues (including fuel surcharges) were 66% higherat C$149 million. Driven by improved operating efficiencies and the contribution of Dynamex,segment EBIT doubled to reach $9.3 million, up from $4.7 million a year ago.
The TransForce package business will virtually double in size this year once the C$25 millionacquisition of DHL Express Canada’s domestic business, which was announced last month, iscompleted. The takeover of the business, which will re-brand to Loomis Express, will add annualrevenues of about C$275 million (€196 million) and about 2,000 staff to the group. Dynamex, boughtlast autumn for US$248 million, had annual revenues of US$418 million last year.
The group’s LTL revenues (before fuel surcharges) decreased 6% to C$105.4 million due to lowervolumes and weak market conditions and the unit dropped to a small loss. Full truckload revenuesrose 4% to C$144.4 million due to higher volumes and the unit’s EBIT nearly double to C$6.2million.
The company said its strong start to the year was achieved in spite of a weak economic recoveryand rising fuel costs. “TransForce posted a most satisfying performance in what has historicallybeen a seasonally-weak quarter. Our leading and growing position in strategic markets and constantfocus on providing innovative, value-added solutions to our customers delivered solid dollarincreases in our key EBIT metric, as well as in cash flow and adjusted profit. This momentum offsetheadwinds caused by the rapid rise in fuel costs and the persisting strength in the value of theCanadian dollar,” said Alain Bédard, Chairman, President and Chief Executive Officer.
Looking ahead, he commented: “Since the beginning of 2011, TransForce has further enhanced itsleadership in the North American Package and Courier industry by broadening its geographical reach,service offering and customer base. The acquisition of Dynamex brings us a strong brand and asignificant presence in the US. It also provides additional opportunities, as the US market remainshighly fragmented. The acquisition of DHL’s Canadian domestic operations, as well as the ten-yearstrategic alliance with DHL Express Canada announced last month, once completed, will creategreater scale and density for TransForce in the Canadian market, while providing additionalinternational services to our existing customers. As we gradually achieve all synergies andefficiencies, these new and upcoming acquisitions will further increase shareholder value.”
Bédard stressed that further acquisitions remain on the agenda. “While in the short-term we willfocus on cash flow generation and debt reduction, TransForce intends to remain an active, yethighly disciplined and selective consolidator in its strategic market segments. As questionspersist concerning a sustained recovery in the economy, TransForce will continue its successfulprogram of controlling costs, improving operating efficiencies, as well as protecting and improvingits operating margins,” he said.
The Montreal Gazette newspaper cited Bédard as saying that more acquisitions could follow in theUSA in 2012 once the acquisitions of Dynamex and DHL Express Canada Domestic had been integrated.“These are two key acquisitions that give us a firm foothold in the US same-day delivery market anda full participation in the international package and courier market,” he told the newspaper.
