UTi reports decline in Q1 as it implements turnaround programme


UTi Worldwide has announced its financial results for the first quarter of its 2016 fiscal year ended April 30, 2015. It reported revenue of $973.3m, a decline of 6.76% year-on-year. The company also recorded adjusted EBITDA of $8.0m, a fall of 56.04%. Accordingly UTi’s adjusted EBITDA margin stood at 0.82%.

Edward Feitzinger, Chief Executive Officer said, “Our first quarter results were in line with our expectations coming out of the fourth quarter, reflecting solid execution against the key priorities of our turnaround plan. As I discussed last quarter, there are four priorities that are critical to our near-term success – deliver consistent performance in our CL&D business, manage our costs, make improvements in working capital and drive growth and margin improvements in our freight forwarding business.”

The decrease in Q1 revenue was primarily related to lower ocean and air yields and volumes in freight forwarding as well as the strengthening of the US Dollar against the Euro and South African Rand. On a constant currency basis, revenues were up 0.7%, while net revenues declined 3.1%. Operating loss for the quarter was $18.8m compared to $3.3m for the prior year period, primarily due to lower net revenues and $4.4m in higher severance and other costs.

Net revenues for Contract Logistics and Distribution decreased by 4.7% to $192.2m in the first quarter of fiscal 2016 year-on-year. On a constant currency basis, net revenues for Contract Logistics and Distribution increased by 2.4%. Q1 operating income was $10.0m compared to $13.7m for the same period last year. The variance was primarily related to the shut-down costs ($2.0m) associated with the expected exit of a joint venture, currency exchange rate fluctuations ($0.8m), and lower operating results in South Africa.

Net revenues for Freight Forwarding decreased by 18.1% in the first quarter, to $137.3m year-on-year. On a constant currency basis, net revenues for Freight Forwarding decreased by 9.8%. The decrease was primarily related to lower ocean and air yields and volumes. The operating loss was $11.1m for the first quarter of fiscal 2016 compared to operating income of $1.2m for the same period of 2014.

Feitzinger concluded, “On a relative basis, we are pleased with the start to the year and the first full quarter under our new playbook. We are executing on our internal initiatives, clients have voiced their confidence in our new strategy and direction and the pieces are beginning to fall into place as we work towards our goals of working capital and profit improvement. While we have made significant progress, we are still in the early stages of our turnaround and will need to drive incremental net revenue growth throughout the year in order to achieve our targets.”