Supply chain service and solution provider, UTi Worldwide Inc.’s (NASDAQ: UTIW) shares climbed over 8% on Thursday even as the company announced disappointing fiscal second-quarter results primarily due to a slowdown in its ocean and air freight businesses amid ongoing economic uncertainty.
For the quarter, earnings fell by 17% compared to year earlier quarter.
Commenting over disappointing quarterly results, Companyâ€™s Chief Executive, Eric W. Kirchner said to analysts in a conference call, â€śThe anemic global economy and weak freight environment continued to weigh on resultsâ€¦.Clients have become increasingly careful in their freight and logistics spending.â€ť
Although the company witnessed marked improvement in shipping demand, other business segments struggled. For example, sale of cargo spaces and services such as customers clearance and warehousing for companies remained sluggish as customers seemed to be drawing down inventories rather than stocking up on new goods amid slowing global economy.
Moreover, the company, just like any other player from this sector, struggled to pass on carriersâ€™ price rise to customers even as uncertainty is rising with regard to shipping volume.
â€śThe uncertain atmosphere has led many companies to reduce their production, which impacts their level of spending on freight and logistics,â€ť added Kirchner.
The gloomy results come just few days after its larger rival FedEx (NYSE: FDX) cut its already downwardly revised quarterly profit in the wake of weakness in shipping business.
For the quarter which ended July 31, UTi reported a profit of $18.9 million, or 18 cents a share, compared to $22.9 million, or 22 cents a share, in the year earlier quarter. Â After excluding onetime expenses and other charges, earnings came at 20 cents compared to 24 cents in the corresponding of the last year.
Revenue shrunk 11% to $1.16 billion.
Analysts polled by Thomson Reuters had forecasted earnings of 23 cents on revenue of $1.28 billion.
While revenue from airfreight slumped 20%, it fell 4.9% in ocean freight business. Â Ocean freight business was steadier as clients continued to prefer cheaper mode for now, said Kirchner.