Why did JBTM's operating profit drop sharply in Q4 2024?

The operating profit of JBT Marel (JBTM) declined significantly in Q4 2024, primarily due to a substantial decrease in operating revenue. Here’s a detailed analysis:

1. Revenue Decline: The operating revenue for JBTM in Q4 2024 was $467.6 million. This is a significant drop from the previous year, indicating a substantial decrease in the company's core business operations.

2. Segmental Performance: Although the Intermodal division showed resilience with a 5% increase in load growth and a 3% rise in revenue per load, the overall revenue remained flat at $1.56 billion. This was not enough to offset the declines in other segments.
3. Cost Factors: The decline in gross revenue per load in Intermodal and Truckload segments by 5% and 6%, respectively, suggests that JBTM faced challenges in maintaining profitability per unit of output. This, coupled with a 10% and 6% decrease in load volume for Integrated Capacity Solutions and Dedicated Contract Services, respectively, paints a picture of a company struggling to fill volume and pricing gaps across its service offerings.
4. Strategic Decisions: The company's strategic decision to exit certain non-core operations could have contributed to the revenue decline. For instance, the termination of seed cleaning operations and a decrease in lower-margin wood fence business led to a Q4 2024 revenue of $13.2 million, down from $14.6 million in Q4 2023. These divestitures might have been necessary to focus on core competencies but came at the cost of reduced revenue.

In conclusion, JBTM's operating profit drop in Q4 2024 is primarily attributed to a combination of decreased revenue across core segments and strategic shifts that adversely affected overall profitability.