Freight transportation and logistics services company Con-way Inc. (CNW) posted a fall in its third-quarter profit, hurt by lower demand for services, and cautioned that the prospects for earnings growth in the near term appears low.
The San Mateo, California-based company posted net income available to common shareholders of $13.5 million or $0.27 per share for the third quarter, down from $38.8 million or $0.81 per share in the prior year quarter.
The 2009 third quarter included the effect of a change in accounting estimate related to revenue adjustments at Con-way Freight and a charge for certain discrete tax items.
Excluding the items, the company said its earnings per share were $0.39 for the latest quarter. On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the third quarter. Analysts' estimates typically exclude special items.
Operating income for the quarter dropped to $41.1 million from $78.9 million in the previous year quarter.
Con-way President and CEO Douglas Stotlar, said, "Profits were constrained due to pricing levels, higher variable operating costs associated with the tonnage growth and lower fuel surcharge revenues."
Third-quarter revenue declined to $1.13 billion from $1.37 billion in the same quarter last year, as the recessionary economy curtailed demand for services. Ten analysts had a consensus revenue estimate of $1.14 billion for the third quarter.
Revenues for Con-way Freight, the company's less-than-truckload operation, fell 14.3% to $692.8 million. Yield declined 19.4%, mainly due to the weak pricing environment from industry overcapacity. Excluding the fuel surcharge, yield declined 10.5%.
Menlo Worldwide Logistics, the company's global logistics and supply chain management operations, reported revenues of $344.4 million, down 18% from the third quarter of 2008, due to a decline in fuel-surcharge revenue, and significantly lower costs for purchased transportation sourced by Menlo's transportation-management group as the company continued to leverage pricing opportunities with third-party trucking service providers. Excluding purchased transportation expense, net revenues grew 1% to $129.3 million.
Revenue for Con-way Truckload, the company's full-truckload transportation operation, slipped 32% to $95.7 million, after the elimination of $50.6 million in inter-company revenues.
For the nine-month period of 2009, Con-way reported a net loss applicable to common shareholders of $109.0 million or $2.32 per share, compared with $110.0 million or $2.30 per share in the previous year period. Revenues for the year-to-date period slipped to $3.15 billion from $3.91 billion in the prior year period.
Looking ahead, Stotlar said, "Overall, the business environment continues to present formidable challenges, characterized by weak demand, excess capacity and pricing pressure. We expect these conditions to persist in the near term, diminishing the prospects for earnings growth."
Among others in the industry, YRC Worldwide Inc. (YRCW) reported a narrower net loss for the third quarter in the absence of a year-ago impairment charges, and a 55% drop in operating expenses. Quarterly revenue dropped by 45%, as all the segments posted a double-digit drop in revenue.
Con-way closed Tuesday's regular trading session at $32.62, up 62 cents or 1.94% on a volume of 2.72 million shares. However, in the after-hours, the shares lost 92 cents or 2.82%.
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