(Bloomberg) -- Freight hauler XPO Logistics Inc. took advantage of a tight trucking market and surging e-commerce to double profit.
XPO’s large-goods delivery business, which hauls items such as stoves and refrigerators and hooks them up in homes, helped boost revenue 18 percent in the first quarter, XPO said in a statement Wednesday as it reported earnings. Chief Executive Officer Bradley Jacobs has expanded the business into the largest of its kind in the U.S. The logistics unit, which helps companies process and ship their e-commerce sales, added to the growth.
The results underscored strong demand for trucking services, which pushed up spot rates in the freight market 27 percent in the first quarter and weighed on profit at shippers from 3M Co. to General Mills Inc. Driver shortages, new regulations that are crimping cargo capacity and the growth in package deliveries from surging e-commerce are expected to keep rates high through the year.
CEO Jacobs, who climbed into the billionaire ranks by building and selling businesses, is using technology to gain market share -- the strategy he used at four previous companies he sold before taking control of XPO in 2011 with a $150 million investment. XPO plans to spend $450 million on technology this year, and just introduced a digital freight marketplace, a voice application for customer self-service, and a shared-space warehouse distribution system that gives shippers more flexibility on where to send goods.
“We’re making disciplined investments in innovation and sales to propel long-term growth,” Jacobs said in the statement. He’s previously discussed making a large acquisition by the end of this year.
Adjusted earnings doubled to 61 cents a share, compared with the 51-cent average of analysts’ estimates compiled by Bloomberg. Sales of $4.19 billion also beat expectations.
Shares fell 2 percent to $93.59 in New York. The earnings were released after the market close. XPO has risen 2.2 percent this year, compared with a 3.7 percent decline in an S&P 500 index of trucking companies.
©2018 Bloomberg L.P.