US-based forwarder and logistics services provider Expeditors International reported second-quarter net income up 29.0% y-o-y to a record $118 million, as net revenues rose 13.9% to $552 million – also a record. Operating income for the quarter was up 28.3% to $183 million, yet another record.
The year-over-year gains in operating income and net income, as large as they seem at first glance, are even more significant given that Expeditors has long been the most profitable of the major forwarders. It may be easy to increase profit when you are hardly profitable at all, but to achieve the kind of gains Expeditors is reporting when you are already well ahead of the pack is remarkable.
Just how profitable is Expeditors? Second-quarter operating margin was up 3.7 percentage points to 33.1%, and net margin rose 2.5 points to 21.3%.
Looking at the results by business segment:
- Air freight forwarding: Net revenue from air freight forwarding was up 13.9% in the second quarter to $187 million, as tonnage rose 9%. Operating margin rose 2.3 points to 26.9%
- Ocean freight forwarding: Net ocean forwarding revenue was up 27.2% to $143 million as volume rose 5%. Operating margin for ocean freight forwarding activity was up 3.9 points to 24.9%
- Customs brokerage and other services: Net revenue in this segment was up 6.7% to $222 million, and, as profitable as Expeditors’ forwarding business is, it pales when compared to the customs brokerage arm of the business, which saw second-quarter operating margin increase slightly (0.1 points) to 52.7%.
For the first half of 2015, Expeditors’ net income was up 28.2% to $224 million, as net revenues rose 13.9% to $1.08 billion. Operating income for the half was up 26.6% to $352 million. Margins for the half were just as good as they were for the second quarter, Airfreight operating margin was up 2.2 points to 27.2%, ocean freight margin was up 1.8 points to 23.1%, and customs brokerage margin was up 0.2 points to 52.9%. Overall net margin for the half was up 2.4 points to 20.8%.