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Investing.com -- S&P Global Ratings has upgraded C.H. Robinson Worldwide Inc. to ’BBB+’ from ’BBB’ as the logistics company’s credit measures have significantly improved due to operational initiatives and disciplined capital allocation.
The rating agency noted that C.H. Robinson’s funds from operations (FFO) to debt has remained above the previous 45% upgrade threshold since the fourth quarter of 2024, despite challenging industry conditions. This improvement follows two years of headcount reductions and a pause in share repurchases to prioritize debt repayment.
S&P now forecasts the company will sustain FFO to debt well over 45%, with expectations of mid-50% levels in 2025. The stable outlook reflects S&P’s view that operational efficiencies gained over recent years can offset potential industry headwinds from trade policy uncertainty.
The company’s FFO to debt reached 57% as of June 2025, driven by structural changes to its cost base and debt reduction. S&P Global Ratings-adjusted debt to EBITDA has dropped to the mid-1x area, exceeding previous expectations.
Personnel expenses have declined 19% (approximately $325 million) since peaking in the fourth quarter of 2022, with average headcount down about 27% compared to the same period. The company has reduced headcount sequentially each quarter since Q4 2022, while improving adjusted gross profit per employee through automation and digital capabilities.
S&P expects the freight industry to face softer demand in the second half of 2025 following significant front-loading of shipments in the first half ahead of tariff implementations. Despite these challenges, C.H. Robinson is taking a balanced approach to margin and volume, using technology to prioritize higher-margin freight.
The rating agency forecasts S&P Global Ratings-adjusted gross profit to remain relatively flat in 2025 after growing 6.2% in 2024. Truckload and less-than-truckload segments are expected to grow 2%-3%, offset by a projected 9% decline in ocean business due to lower pricing and volumes.
C.H. Robinson resumed share repurchases in the first quarter of 2025 after pausing them in the third quarter of 2023 to improve metrics. The company has also repaid the $141 million balance on its revolving credit facility and reduced borrowing under its accounts receivables facility by $70 million since the second quarter of 2023.
S&P forecasts strong reported free operating cash flow of about $700 million in 2025, enabling increased share repurchases without significant risk to credit metrics.
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