European revenues drive UTi growth
UTi, the US based international freight forwarding and contract logistics operator (formerly known as Union Transport), has released its first quarter financials for fiscal year 2005. The results show strong growth in both revenues and profits, driven by a good performance in Europe. Net revenues increased by 29% to $170.0m (€142m) from $131.4m (€109m) in the same quarter of the previous year whilst operating profits increased by 68% to $18.7m (€15.6m) from $11.1m (€9.25m). Operating margins rose from 8.4% to 11%.
The company experienced growth in all its divisions. Sea freight revenues grew by 32% to $21.2m (€17.6m); air freight by 26% to $56.7m (€47.2m) and contract logistics by 30% to $56.3m (€46.9m). Although there was strong growth in all regions, European revenue’s increased the most by 44% to $39.7m (€33m). Its profit margin in Europe on net revenue rose to 15% from 6% as a result of overcoming operating issues within the last year in its Ireland and Sweden road freight operations. It also increased its penetration of the European contract logistics sector.
Contract logistics has become one of the main areas of development for UTi. In 2001 it accounted for under 3% of revenues, but this has grown quickly helped by a number of worldwide acquisitions including UK, Spain and Sweden. Contract logistics now accounts for a third of the total net revenues.
UTi also announced that it had closed its acquisition of International Healthcare Distributors in South Africa. The deal, which was first revealed in December 2003, had been held up by concerns over new healthcare legislation to be introduced by the South African government. IHD was previously owned by 11 multinational pharmaceutical manufacturers and had revenues in 2002 of $35m (€29.2m). Ownership by UTi will be shared with a black economic empowerment organization which will control 25.1% of the shares.
