Logistics and transportation services provider Con-Way Inc. (CNW) on Monday lowered its earnings outlook for the full year 2008, blaming unprecedented economic conditions and turbulent market conditions. The company also slashed its nationwide workforce by about 8% or about 1,450 positions, citing lower tonnage at Con-way Freight.
Con-way was already hurt by unprecedented fuel costs, along with the challenging and uncertain economic environment, curtailing demand for freight transportation services, which forced the company to put pressure on pricing and margins.
For the full year 2008, the company has lowered its estimate earnings from continuing operations outlook to a range of $2.20 to $2.35 per share from its previous guidance of $2.60 to $2.80 per share.
On average, 12 analysts polled by First Call/Thomson Financial expected the company to earn $2.79 per share for the year. Analysts' estimate typically exclude special items.
Douglas Stotlar, Con-way president and CEO, said, "While we are focused on aggressive cost-reduction measures, over the past two months the effect of decelerating volumes in the LTL market, coupled with pricing pressures and lower fuel surcharges have significantly curtailed expectations for 2008 earnings, the fourth quarter in particular."
The company said that its tonnage volumes fell 3.8% in October and 9.2% in November, respectively, from last year, at Con-way Freight. As a result, the company said that it has reduced its nationwide workforce by about 8% or about 1,450 positions since Oct. 23.
On Dec. 5, the company eliminated 78 staff positions at Con-way Freight's Ann Arbor, Mich., general office, 60 positions at an administrative center in Texas, and realigned its area and regional division structure to streamline management. The company expects to incur charge of about $7.5 million in the fourth quarter due to the workforce reductions.
As a result of the workforce reductions and November's network re-engineering initiative, Con-way Freight expects to realize annualized cost savings in excess of $40 million.
The company said it is offering a separation package to the individuals, who are subject to workforce reduction. The separation package includes severance pay, a lump-sum payment intended to assist with incidental costs and a payment equal to the annual year-end bonus for which a separated employee would have been eligible on Dec. 31.
Con-way's other two principal business units, Menlo Worldwide and Con-way Truckload, have instituted expense-curtailment initiatives specific to their companies. In addition, Con-way's corporate group and enterprise shared-services operations in Portland, Ore., have reduced staffing by 88 positions.
Further, the company said it expects to record an impairment charge of $30 million to $35 million to write down the value of its investment in Chic Holdings Ltd., a Shanghai, China-based transportation and logistics company. Chic Holdings was purchased by Con-way's supply chain management unit, Menlo Worldwide LLC in 2007 for $60 million.
San Mateo, California-based Con-way has scheduled to release its fourth-quarter financial results on Jan. 26, 2009.
Con-Way closed Monday's regular trading session at $25.77, up 88 cents or 3.54% on a volume of 1.49 million shares. The stock has been moving in a range of $21.72 - $55.00 for the past 52 weeks, with a three-month average volume of about 1.34 million shares.
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December 19, 2025 15:10 ET U.S. inflation data and interest rate decisions by major central banks were the highlights of this busy week for economics news flow. Employment data and survey results on the housing markets also gained attention in the U.S. In Europe, the European Central Bank and Bank of England announced their policy decisions and macroeconomic projections.