Mullen’s trucks help buoy ‘difficult’ fourth quarter

Mullen Group’s (TSX:MTL) trucking and logistics units gave a small but important boost during the fourth quarter, helping offset continued weakness in the Canadian firm’s oil services business.

Mullen reported adjusted net income of C$5.6 million, or C$0.08 per share, on C$314.6 million in revenue during the fourth quarter of 2019. Revenue fell by 5.6% and net income by 66.9% compared to the same period of 2018.

Despite the declines, Mullen’s trucking and logistics business performed well during the quarter. Trucking and logistics revenue increased by 2.2% compared to a year earlier to a record C$224.6 million while operating income jumped by 13% to C$33.2 million.

Mullen CEO Murray Mullen said he was “pleased with the results” but painted a dour picture of the freight environment. He pointed to “weak shipper demand, accompanied by changes to the supply chain, an inventory overhang as suppliers ramped up shipments earlier in the year and excessive truck capacity.”

“These factors are the primary reason the Trucking/Logistics segment struggled to show any meaningful growth during the quarter, in spite of a relatively strong performance in our LTL business, which continues to benefit from solid consumer demand.”

Revenue from several tuck-in acquisitions and two subsidiaries, Gardewine Group Limited Partnership and Smook Contractors, helped lift the performance of Mullen’s trucking and logistics segment — which stretches from Ontario to British Columbia.  

The gains helped cushion declines from Mullen’s now-secondary oil services business, whose struggles reflect the downturn in Western Canada’s energy sector. Oil services revenue plunged by 19.9% to C$91.4 million, while operating income fell by 25.5% to C$15.5 million.

Murray Mullen discusses the results with analysts on Thursday.