Fuel surcharges and acquisitions result in revenue increase for Ryder

Ryder’s latest earnings depict strong growth for the company during 2011.

Taking advantage of acquisitions it made within the past year, the company reported fourth quarter revenue of $1.54bn, a 17% increase and for 2011, total revenue of $6.05bn, an 18% increase over 2010.

Although its Fleet Management segment comprises almost 70% of total revenue, the greatest percentage growth came from Ryder’s Supply Chain Solutions (SCS) and Dedicated Contract Carriage (DCC) segments.

The Fleet Management segment reported fourth quarter revenues of $1.07bn, a 13% increase thanks to fuel services revenue growth of 18% and the ability of passing through higher fuel prices to its customers. For the year, the segment increased revenues by 10%.

More impressive were the results from the SCS and DCC segments. Ryder’s SCS segment, representing almost 27% of Ryder’s total revenue, reported fourth quarter earnings increased 26% to $408.7m. For the year, the segment increased revenues 28% to $1.6bn. Organic growth and its acquisition of Total Logistics Control (TLC) in late 2010 were the key drivers of this growth.

DCC, which contributes about 10% of Ryder’s total revenue, reported quarterly revenue of $156.6m, an increase of 29%. For the year, total revenue increased 24% to $600m. The acquisition of The Scully Companies and pass-through of higher fuel costs benefited the group.

Moving forward, Ryder expects "only modest growth in 2012". It appears the company is still in the process of working through some integration concerns, particularly with The Scully Companies. Also operational changes made by some of Ryder’s larger customers in 2011 could negatively impact the company’s overall revenue this year. Despite these concerns, it does seem that the acquisitions, particularly that of TLC, have already proven successful. For example, long known for its strength in the automotive vertical sector, now, due to the TLC acquisition, Ryder’s SCS segment has gained a foothold in the CPG (consumer product goods) vertical sector which currently makes up half of the segment’s pipeline.

Because of strong financial gains, it appears there will more of a focus on the SCS and DCC segments. Beginning this year, the DCC segment has been rolled up into the SCS segment and there are plans to connect DCC strengths with Ryder’s vertical industry group strategy. Also, additional acquisitions to enhance its supply chain and dedicated contract carriage solutions are possible.

Not only will there probably be a focus on SCS and DCC, but also on bundled solutions encompassing all segments. As noted in Ryder’s earnings call, combining services from all its segments into solutions for customers has proven quite successful for the company and it is a strategy the company plans to continue to capitalise on.

Quelle: eyefortransport
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