With an eye on the coming recovery, Old Dominion Freight Line pumped $50.2 million into infrastructure investments even as the less-than-truckload multi-regional motor carrier’s revenue fell 22 percent and profit plummeted 55 percent in the third quarter.
Revenue was $322.8 million in the quarter ended Sept. 30, compared with $415.9 million for the third quarter of 2008. The decline reflected a 14 percent drop in tonnage as well as lower surcharge returns because of the cost of diesel.
Net income was $10.5 million, compared with $23.4 million a year earlier. Old Dominion’s operating ratio was 93.8 percent for the third quarter of 2009, compared with 89.8 percent for the third quarter of 2008.
The weakness in the third quarter was a result of overall tonnage declines and aggressive price competition, the company said.
“We believe yields in the industry will not improve until capacity more closely meets demand, which could occur through either a significant improvement in the U.S. economy or through additional industry consolidation. Until such time, we anticipate continued pressure on our yields,” said Earl Congdon, executive chairman of Old Dominion.
Nevertheless, during the quarter Old Dominion relocated six service centers into larger facilities and opened a new center in Olympia, Wash. After completing opportunistic real estate purchases during the third quarter, total capital expenditures for the first nine months of 2009 were $180.6 million, and the company has increased its expected capital expenditure budget for the year to approximately $200 million, Congdon said.
“Based on our performance for the third quarter of 2009 and throughout this economic downturn, we are well positioned to continue weathering the current environment and to leverage our value proposition into further profitable growth as market conditions improve,” said Congdon.
Contact Thomas L. Gallagher at email@example.com.