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Company earningsEuropeLast MileLess than TruckloadLogisticsNewsParcel

FM Logistic’s operating income up 20%; future guidance withheld

COVID-19 uncertainty provides French 3PL with ‘little visibility’ into 2020-2021 fiscal year

French-based third-party logistics provider FM Logistic on Wednesday reported 21% year-over-year growth in earnings before interest and taxes (EBIT) for its fiscal year ended March 31.

Operating income of 42.5 million euros (U.S. $47.8 million) was the result of only modest revenue growth of 8.7% at 1.43 billion euros (U.S. $1.61 billion). Excluding foreign exchange rates, revenue increased 8% during the year. Management said the increase came from “entirely organic” growth.

“FM Logistic again achieved a strong performance in 2019/20. The 21% EBIT growth confirms the positive impact of our Focus programme. Revenue growth was entirely organic, supported by strong sales execution and the introduction of new services, particularly in the omnichannel and urban logistics areas,” commented FM Logistic CEO Jean-Christophe Machet.

Revenue in France increased 7.7% to 550 million euros (U.S. $618 million), accounting for 38% of the company’s total revenue. Revenue growth rates in Central and Eastern Europe were more pronounced, ranging from 8% to 16%. Transportation revenue increased to more than 500 million euros (U.S. $561.8 million), driven by growth in its less-than-truckload (LTL) segment and its urban logistics service, Citylogin.

Citylogin coordinates last-mile deliveries with small proximity hubs in urban areas, allowing pooled and outsourced logistics offerings to merchants in large metro areas. The service is now offered in 30 cities throughout Europe.

The company reported “especially strong” revenue growth in the cosmetics, beauty and e-commerce markets, with geographic strength reported in France, Spain, India and Russia. New offerings like bulk supply chain solutions and dropshipping service for manufacturers selling directly to consumers added to the increase.

FM Logistic’s EBIT margin improved 30 basis points year-over-year to 3%. The company cited improved headcount efficiency as a reason. Revenue increased 8% in the year by only adding 1.3% to headcount as the result of “the success of skills development efforts and training programs, particularly in warehousing operations.”

FM Logistic continued its expansion in India and Vietnam, opening new warehouses and distribution centers.

The company reported little impact from COVID-19 during its most recent fiscal year but cautioned April and May revenues were “affected,” presenting “little visibility” into the 2020-2021 fiscal year.

“The Covid-19 outbreak had a limited impact on the financial year ended in March 2020. However, the start to the new fiscal year has been more challenging. In April and May 2020, we saw an overall 9% revenue decrease compared with the previous year and a significant increase in operational costs related to anti Covid-19 prevention measures,” continued Machet.

FM Logistic reported almost all of its facilities are open and that “underlying fundamentals remain strong.” The company said it inked new contracts worth 150 million euros (U.S. $168.5 million) in the year, mostly in e-commerce logistics and the cosmetics and beauty sectors.

The company provided no guidance for its fiscal year ending March 31, 2021.

“Most importantly, we have some substantial strengths, namely a sound financial situation, a balanced customer portfolio of food and non-food FMCG [fast-moving consumer goods] companies and retailers, our e-logistics ability, a mostly domestic activity and a stable family shareholding structure,” said Machet. “Supply chain services help meet the essential needs of the populations and businesses. All these give us confidence in our ability to get through this unusual period.”

The company will publish a detailed annual report on July 10, the same day it holds its annual meeting.

FM Logistic was founded in 1967. The privately held, family-owned logistics company has more than 27,500 full-time-equivalent positions across 14 countries in Europe, Asia and Latin America.

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.
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