Con-way 2nd quarter profit off by a third
Freight transportation and logistics firm Con-way on Wednesday reported sharply lower second-quarter profit compared to a year ago. Net income was off 35 percent to $47.7 million compared to $74.1 million in the same period in 2006.
Con-way’s results highlight the continuing weakness in the economy felt by the trucking sector as a whole, as well as some pricing mistakes last year that led to some loss of business as overall demand sloughed off.
Earnings in the quarter were negatively affected by an $8 million payout, some of it covered by insurance, for an accident claim against one of the San Mateo, Calif.-based company’s trucking subsidiaries. The year-to-year comparisons were also impacted by the loss of business from Vector SCM, the joint venture logistics management company between Con-way subsidiary Menlo Logistics and General Motors. Con-way sold Vector to GM at the end of 2006 when the automaker decided to exercise its option to control the business itself.
Operating income, minus these charges and other tax provisions, was $77.6 million, down 30.6 percent on revenue of $1.07 billion. During the same year-ago period revenue was $1.10 billion, or 2.4 percent more, and operating income was $111.8 million
“The soft market for less-than-truckload freight remains highly competitive and price-sensitive, which has put pressure on yields. Given the market conditions we have been experiencing, we expect LTL freight demand to remain restrained through the remainder of 2007 leading to moderate year-over-year volume growth,' Con-way Chief Executive Douglas Stotlar said in a statement.
Yield for Con-way Freight, the company’s multi-regional less-than-truckload carrier, declined 3.5 percent from the previous-year second quarter, and was down 3.4 percent excluding the fuel surcharge.
Earlier this week Con-way said it planned to acquire large private truckload carrier Contract Freighters Inc., which will take over the Con-way Truckload Services operations.
Combined operating profit on the trucking side was $70.3 million on revenue of $749.8 million, down from $754.4 million. Menlo achieved operating earnings of $6.9 million, up 13.8 percent not including Vector’s $4.7 million in earnings in 2006. Menlo’s net revenue increased 9.7 percent to $105.9 million from $96.6 million.
Con-way’s first quarter net income also declined by roughly one-third from the same period in 2006, with operating income down 28.5 percent.
Con-way also owns a trailer manufacturing business.
Con-way 2nd quarter profit off by a third
