Shares of Ryder System Inc. (R) slid nine percent in after-hours trade Thursday, after lowering its earnings outlook for the second quarter and fiscal year 2012. The company attributed the move to mainly muted performance at its Fleet Management Solutions business.
Ryder, which provides transportation and supply chain solutions, said its Fleet Management Solutions business during the second quarter was hurt by reduced demand for the commercial rental product line, and actions taken to reduce used vehicle inventories.
The company also cited surprisingly high medical benefit costs that are likely to reduce earnings by about $0.05 per share in the quarter.
Miami, Florida-based Ryder now expects second quarter earnings of $0.90 to $0.95 per share, down from its prior guidance of $1.07 to $1.12 per share. Analysts polled by Thomson Reuters currently expect earnings of $1.10 per share for the quarter. Analysts' estimates typically exclude one-time items.
CEO Greg Swienton said: "We are responding with timely and appropriate business adjustments and cost management initiatives to address economic headwinds that are expected to continue through the remainder of the year..."
Ryder is also pruning the size of its commercial rental fleet through the rest of the year, anticipating restrained demand to continue through 2012.
The company noted that while retail sales of used vehicles remained stable, concerns lingered regarding an expected increase in wholesale activity for the year, and higher used vehicle inventories.
Ryder now estimates fiscal 2012 earnings of $3.65 to $3.85 per share, compared to its prior forecast of $4.02 to $4.12 per share. Analysts currently expect earnings of $4.09 per share for the year.
Ryder also plans to implement cost reduction measures in view of the current business scenario. The measures are to result in an estimated second quarter pre-tax restructuring charge of about $0.10 per share. The cost saving actions are expected to benefit earnings in the second half of the year by an estimated $0.18 per share.
Ryder's revised 2012 forecast range is up 5 to 10 percent from its comparable 2011 earnings of $3.49 per share. The forecast excludes restructuring charge and other items.
R closed Thursday's trading at $40.75, down $1.66 or 3.91%, on the NYSE. In after hours, the stock further dropped $3.80 or 9.33%. In the past year, the stock traded in a range of $34.28 - $60.38.
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