February 14, 2019 / 9:56 PM / 9 months ago

XPO Logistics warns on 2019, shares swoon

(Reuters) - XPO Logistics Inc, one of the largest global freight transportation and warehousing companies, on Thursday reported quarterly profit that missed targets and warned that a reduction of business from its biggest customer would hit 2019 growth.

XPO shares plunged 14.4 percent to $51 in after-hours trading.

Chief Executive Bradley Jacobs said quarterly results missed internal targets due to challenges in France and the U.K., as well as the loss of profit from a key business segment of its largest customer, which was not identified.

Jacobs forecast 2019 adjusted earnings growth in the 6-10 percent range. “This anticipates the impact of our largest customer substantially downsizing its business portfolio with us ... as well as our more cautious view of Europe,” he said.

XPO, also known for its big and bulky last-mile delivery services, got 40 percent of its revenue from outside the United States last year. France and the U.K. are its top international markets.

Fourth-quarter net income attributable to common shareholders was $84 million (66 million pounds), or 62 cents per share. That was down from $189 million, or $1.42 per share, a year earlier, when XPO got a large boost from U.S. tax reform.

Excluding items, XPO earned 72 cents a share.

Analysts, on average, expected a profit of 84 cents, according to Refinitiv IBES data.

Quarterly revenue grew 4.6 percent to $4.39 billion.

XPO said in its annual report filed on Thursday that the reduction of business from its largest customer shaved revenue by $46 million in the fourth quarter.

That customer further curtailed business with XPO in early 2019 - a move that could decrease revenue by roughly $600 million this year, or about two-thirds of the revenue the customer generated 2018, XPO said in the regulatory filing.

Earlier on Thursday, XPO said it would close a Verizon-contracted distribution center in Memphis that was the subject of a New York Times investigation into pregnancy discrimination against female workers, at that customer’s request.

Thursday’s news piles pressure on XPO, which has been the target of a short seller who charged that the company employs aggressive accounting to put a shine on returns from acquisitions. XPO called the accusation intentionally misleading and inaccurate.

XPO’s shares closed at $59.55 on the New York Stock Exchange ahead of the release of its results. Executives will host a conference call with investors and analysts before the market open on Friday.

Reporting by Lisa Baertlein in Los Angeles; Editing by Leslie Adler and James Dalgleish

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