The less-than-truckload (LTL) carrier Old Dominion Freight Line saw operating profits rise 21.9 percent year-on-year in 2012 to $285.2 million.
The carrier’s net profit rose 21.5 percent to $169.5 million on revenue that rose 12.1 percent to $2.1 billion.
The robust annual figures came despite lower growth in the fourth quarter, with operating income rising 6.6 percent to $67.5 million, and net income falling 1 percent to $39.5 million. Revenue in the fourth quarter rose 8.7 percent to $527.3 million.
“2012 turned out to be another record-breaking year for Old Dominion, as we improved our annual operating ratio to a new company record of 86.5 percent and also produced over $2 billion of revenue for the first time in our company's history,” said Old Dominion President and Chief Executive Officer David S. Congdon, in a statement.
“Our fourth quarter results reflect the impact of Hurricane Sandy and severe winter weather conditions, which slowed our revenue growth and increased our operating costs. We also believe political uncertainty and general concern over the 'fiscal cliff' contributed to a weaker economic environment during the quarter. Despite the impact of these events, we were pleased to produce quarterly revenue growth of 8.7 percent and a quarterly operating ratio of 87.2 percent. This represented the second best fourth quarter operating ratio in our company's history, and we believe will once again be significantly better than the industry average,” he said.
The investment bank Stifel Nicolaus said in a note Thursday that it doesn’t expect Old Dominion to make an acquisition.
“The company continues to grow its non-LTL businesses (i.e., expedited, freight forwarding, drayage, warehousing) at above-average rates but seems content to grow organically for now, as it is either outbid for properties (showing another form of price discipline, which we believe is a strength of this team), or the return on capital is just better in its core business,” the bank said. “Were the company to do an acquisition, we could see it being a small tuck-in either in LTL or in one of its other service offerings, but it would have to be at the right price.”
Stifel Nicolaus also said a slowdown in volumes in the last quarter of 2012 caught the company a bit by surprise.
“Old Dominion is managing its business very well, but in 4Q12 the company was caught off-guard by unexpected tonnage declines, even as volumes still grew y/y each month,” the bank said. “The softer-than-expected volumes coupled with its investments in equipment and infrastructure led to some minor y/y margin compression. Fortunately, 2013 has started off with decent volumes, and the LTL pricing environment remains stable and rational.” - Eric Johnson