The double-digit gains in net income and operating income are even more impressive than they first appear when you consider that not only was the comparison quarter a strong one, but that the gains were achieved against a backdrop of declining volumes – Expeditors said airfreight tonnage in the quarter was down 1% from 4Q15, while ocean freight FEUs declined 2%.
For the full year, Expeditors reported net income up 21.3% to $457 million, net revenues up 10.4% to $2.19 billion, and operating income up 21.3% to $721 million.
Commenting on the year, CEO Jeffrey Musser said “While we believe we benefited in the first half of the year from some unquantifiable increase in airfreight because of the West Coast labor dispute, we were adversely impacted by a softening in rates and volumes in the second half of the year.” In other words, it was not an easy year to do well in. But a look at the company’s margins shows that it did very well indeed:
- For the fourth quarter, Expeditors’ operating margin (operating income as a percentage of net revenue) was 33.2%, and net margin (net income as a percentage of net revenue) was 21.3%
- For the full year, Expeditors operating margin was 33.0%, and net margin was 20.9%