It's a Small UTi Worldwide After All (UTIW)

It's a Small UTi Worldwide After All

By Chris Jones | More Articles
December 10, 2008 | Comments (3)

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Fast, free-flowing exchange of information, goods, and services has made the world appear smaller in recent years, and global borders seem less relevant. Heretofore, UTi Worldwide (Nasdaq: UTIW ) profited from that shrinkage by offering logistics-related services to help facilitate its customers' international operations. However, since economies everywhere are facing hard times and shipping volumes have dropped as a result, UTi is now shrinking its costs in order to carry on.

So far, so good
It's working. UTi has already started to see the benefits of belt tightening. Despite deteriorating volumes in airfreight forwarding, sales were $1.2 billion in its fiscal 2009 third quarter, up 3% from the same quarter last year. Its margins also held up; net income from continuing operations was $35.8 million, or $0.36 per share.

Prior to last Thursday's announcement, shares of UTi closed under $11, but since then its price has climbed by 20%. Meanwhile, its competitors Expeditors International of Washington (Nasdaq: EXPD ) and Hub Group (Nasdaq: HUBG ) watched enviously. UTi's management is enthusiastic about the performance of its contract logistics segment, and despite having lost its lucrative Baytown contract with Wal-Mart (NYSE: WMT ) this year, it remains focused on attracting new business and maintaining strong client relationships.

Foolish Takeaway
UTi's cost-reduction plan spans all areas of the company from maintaining cash management discipline to lowering operating costs through hiring freezes, travel restrictions, and streamlining operations. It has also begun to shed low-yielding businesses, and it is completely restructuring its IT systems. The company expects to see cost savings between $5 million and $6 million annually once the modifications to its technology organization are fully realized in fiscal 2011. Hopefully for UTi, shipping volumes will have picked back up by then, and it will be able to focus on expanding (rather than shrinking) once again.

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Chris Jones does not own shares in any of the companies mentioned. Wal-Mart is a Motley Fool Inside Value recommendation. The Motley Fool's disclosure policy hasn't lost that lovin' feeling, whoa that lovin' feeling..

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Report this Comment On December 10, 2008, at 5:54 PM, Sean0michael wrote:

While UTi is certainly holding up well, I don't think Expeditors is envious. The company doesn't seem to pay much heed to its stock price -- it doesn't issue forecasts or profit warnings, and its CEO is known for some terse language when talking with analysts looking for information about performance targets (as well as having outlawed the word "recession"). EXPD just keeps on chugging, and I bet they haven't noticed the short-term changes UTi's stock has made.
Report this Comment On January 23, 2009, at 10:14 AM, UTIagent wrote:

It seems UTi has some rogue agents that like to break the law. Maybe that is how they are increasing their revenue. With strong arm tactics, slander and lies?
http://www.ripoffreport.com/reports/0/409/RipOff0409163.htm
here are some bits to chew:
"UTi Transport Agent Tyler Sheff, .... as far as bodily threats and physical harm"
"been reported online for bait and switching"
"he threatens to break legs and hunt people down"
"corporate counsel Dennis Heil (General Counsel / VP Legal UTi Transport Solutions Inc. - a UTi Worldwide Company), ..... has allowed it to continue"
"allowing and condoning illegal activity from their agents"
"UTi legal counsel Dennis Heil seems to think it is not a UTi Worldwide company issue'
"I hope Eric W. Kirchner UTi worldwide's new CEO does not make company decisions based on this sage advice from UTi's lackluster crack legal team'
Report this Comment On February 10, 2009, at 4:33 PM, Trucking48 wrote:

Regarding Dennis Heil and the upper management team at UTi, I was their government freight agent for four years. Revenues in excess of $7 million and a profit of 1.1 million. They had may a choice to dump me for younger kids with absolutely no experience with the D.O.D.
Now that I was forced to resign they have made me wait for weeks now for a final settlement and today I was told to have my lawyer contact them without any explanation.
They claim to have such high standards but to me this is nothing more than a scam to hold on to my money. This after I went out of way to make sure they collected all monies owed them for the government freight that my office secured in their name. BUMS
Games, Games Games Good going Dennis Heil

updated 4 hours ago Sponsored by:
	DOW	12,878.28	4.24	0.03%
	S&P 500	1,350.50	-1.27	-0.09%
	NASD	2,931.83	0.44	0.02%

UTIW	$14.90		-0.10	-0.67%
UTi Worldwide, Inc…		CAPS Rating:

WMT	$62.22		+0.43	+0.70%
Wal-Mart Stores		CAPS Rating:

HUBG	$35.50		-0.31	-0.87%
Hub Group, Inc.		CAPS Rating:

EXPD	$43.72		-0.03	-0.07%
Expeditors Interna…		CAPS Rating:

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It's a Small UTi Worldwide After All

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Comments from our Foolish Readers

Report this Comment On December 10, 2008, at 5:54 PM, Sean0michael wrote:

Report this Comment On January 23, 2009, at 10:14 AM, UTIagent wrote:

Report this Comment On February 10, 2009, at 4:33 PM, Trucking48 wrote:

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