FORWARDING LOSSES DRAG DOWN USFREIGHTWAYS EARNINGS
USFreightways Corp. said Wednesday it third-quarter net income fell 45.4 percent to $5.3 million, due to continued losses from its soon-to-be sold freight forwarding business.
Revenue for USFreightways improved 2.6 percent to $634.5 million, while earnings from the company's core operations — which includes less-than-truckload, truckload and logistics services — declined 16.3 percent to $13.4 million.
However, the freight forwarding business — USF Worldwide Inc. and USF Worldwide Logistics (UK) Ltd. — showed an after-tax loss of $8.1 billion, USFreightways said. Included in the loss is a $4.7-million charge related to contractual payments paid to former owners of the U.K. business.
USFreightways expects to complete the sale of USF Worldwide and USF Worldwide Logistics (UK) by Oct. 31. The company expects to take an after-tax charge of $10 million to $12 million in the fourth quarter.
'With our exit from the freight forwarding segment, management's concentration can now be tightly focused on the growth and profitability of our core businesses,' said Samuel K. Skinner, chairman, president and chief executive officer of USFreightways.
Skinner said he found the third-quarter results 'somewhat encouraging.' While the company continues to be impacted by the sluggish economy, Skinner said its LTL business benefited from the close of Consolidated Freightways on Sept. 2.
Third-quarter LTL revenue increased 4.7 percent to $483.3 million. Revenue for September alone rose 8 percent, and Skinner estimates about three-fourths of that increase is attributable to business gained from CF's closure.
Operating earnings for the LTL group were flat, at $30.6 million, while shipments increase 5.9 percent and tonnage rose 5.4 percent.
Revenue for the logistics group was flat, at $67.7 million, while operating profits declined to $2.9 million, from $.4 million, due to start-up costs from four new warehouse operations and continued softness in the retail sector, USFreightways said.
USF Glen Moore, the company's truckload carrier, saw revenue increase 20.8 percent to $29.6 million, and operating earnings quadruple to $1.6 million.