Old Dominion Freight Line profit jumped 93 percent in the first quarter, the first year-over-year increase since the third quarter of 2008.
A change in accounting for depreciation of the carrier’s truck fleet contributed $1.3 million to the $7.7 million in profit the company posted. Revenue for the quarter was $317.8 million, an increase of 7.7 percent from $295.1 million for the first quarter of 2009. Old Dominion’s operating ratio improved to 94.8 percent for the first quarter of 2010 from 96.6 percent for the first quarter of 2009.
The first quarter results reflect a reduction in depreciation expense that was a result of revising the salvage values and adding two to three years to the estimated useful lives of the company’s tractor and trailer fleet. Lower depreciation cost reduced the operating ratio by 66 basis points. The company expects an increase to net income in 2010 of approximately $7.6 million resulting from these changes.
Tonnage increased 5.8 percent in the first quarter, driven by a 5.7 percent increase in weight per shipment and a 0.1 percent increase in the number of shipments. Overall pricing was relatively flat considering the changes in the weight, length of haul and other characteristics of the freight, the company said.
“Our tonnage per day accelerated throughout the quarter despite the significant impact of harsh winter weather. This trend has continued into the second quarter, as we expect April’s year-over-year tonnage to increase 10 percent to 11 percent,” said Earl Congdon, executive chairman of Old Dominion.
“The pricing environment remains very competitive in our industry; however, we have been encouraged by recent trends that suggest the overall pricing environment may improve this year,” Congdon said.
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