Con-way shows 2nd quarter stability, despite slow economy
Freight transport and logistics company Con-way said second quarter operating income rose 22.2 percent to $94.9 million compared to $77.6 million in the same 2007 period.
Overall earnings were essentially flat at $47.1 million taking into account dividends, increased vehicle casualty claim costs and a tax gain.
Con-way said business has stabilized for its less-than-truckload subsidiary, which like the rest of the industry has experienced a sharp drop in volume and profits in the face of weak demand during the economic doldrums of the past couple years. Operating income increased 7.2 percent to $77.4 million from $72.2 million a year ago on a 10 percent increase in revenues to $824 million. Tonnage increased 1.9 percent year-over-year, but that was down from 3.1 percent growth in the first quarter. The company said it is picking up market share due to some new customer initiatives and that pricing in the competitive LTL arena appears to have stabilized.
Con-way Truckload, still trying to digest the acquisition and merger of Contract Freighters Inc. last year, had operating income of $12.4 million and revenue of $137.4 million after the elimination of $44 million in inter-company revenues.
Menlo Worldwide Logistics, Con-way’s contract logistics arm, recorded a double-digit increase in net revenue for the quarter based on revenue from new acquisitions, organic growth and new contract wins. But profits were affected by higher than expected costs related to its recent acquisition in China, a charge related to a current customer and a write-off of bad debt. Operating income was off 28.6 percent to $5 million.
“Integration of our acquisition in China is proceeding at a slower pace than planned, so our expectations for profit from this operation will take a longer time horizon to realize,” noted Douglas Stotlar, chief executive officer. “Our expansion strategy in Asia is playing out from a growth perspective; we expect to see operating results improve through the remainder of the year.”