Canadian transport group TransForce improved its profits in Q4, 2011 and over the full yearfollowing several acquisitions, including DHL’s domestic express business.
In the October – December 2011 fourth quarter, the listed company increased revenues by 36% toC$735.5 million (€563 million), driven by the acquisitions of US courier Dynamex in February 2011,Loomis Express (formerly DHL Express Canada’s domestic business) in June 2011 and trucker IE Millerin November. Its operating profits rose 30% to C$55.7 million (€42.7 million), representing a 7.6%profit margin, and adjusted profit increased 63% to C$33.9 million (€26 million).
In 2011 as a whole, TransForce increased total revenue by 34% to $2.7 billion, driven by theacquisitions. EBIT rose 29% to $186.4 million, or 6.9% of total revenue, from $144.2 million, or7.2% of total revenue a year earlier. The reduced profit margin was due to lower margins at Dynamexand Loomis Express.
“Driven by strategic acquisitions, TransForce concluded 2011 with record revenue and a solidincrease in our key EBIT metric. In the fourth quarter, profitability improved largely due toimproved operating efficiencies and enhanced asset utilization, although a hesitant economy causedoverall volume to decline slightly,” commented Alain Bédard, Chairman, President and CEO.
The enlarged Package and Courier division grew to revenues of $301.4 million and had operatingprofits of $19.8 million in Q4, 2011, which was a 6.6% margin. It closed 2011 with revenues of $971million, EBIT of $60.6 million and a 6.2% profit margin.
“In Package and Courier, advances were made in the performance of Loomis Express, which reducedits loss, and we continue to proactively implement cost reduction measures to further enhanceprofitability,” Bédard said. The company is shedding 112 jobs at Dynamex and Loomis and reviewingthe operational network size and structure. TransForce commented in its Q4 report that the Canadianexpress business had seen a volume drop in the last three months of the year and “heavy pricingaction” by its major competitor.
“EBIT for Less-Than-Truckload (“LTL”) operations also rose, as we increasingly benefit from arationalized asset base. Capacity optimization initiatives had a positive effect on Truckload (“TL”) profitability, but revenue was affected by temporary volume decreases in the fourth quarter.Finally, services to the energy sector posted strong results driven by greater density and theacquisition of IE Miller,” he added.
Looking ahead, Bédard said: “We believe the 2012 economic environment will resemble that of 2011with conditions continuing to improve, but at a measured pace. While even this moderate recoveryshould strengthen our results, further improvements in efficiencies and the leveraging of ourenhanced density will build additional shareholder value. We will deliver on this commitment byadhering to our operating principles and by executing our strategy with the same discipline andrigour that have made TransForce a North American leader in the transportation and logisticsindustry. Most importantly, these actions will generate cash flow to further reduce debt.”
