Intermodal middleman Pacer International’s profit tripled year-over-year in the second quarter despite shrinkage in top-line receipts, as the company transitions from wholesaling train space to a retail focus.
Pacer’s profit grew to $4.2 million to $1.4 million profit within the same period. Revenue slid 3.7 percent year-over-year to $386.3 million.
But 2010 was a transition year for Pacer, after it struck a deal with Union Pacific Railroad late in 2009 for an early termination to a long-term, cut-rate train space contract that allowed Pacer to sell that space to smaller intermodal marketing firms.
UP made a cash payment to Pacer, and began quickly taking over domestic intermodal business Pacer previously handled under that contract.
As a result, Pacer has re-focused its marketing on large retail customers, and said the transition is paying off.
“Excluding revenues from the transitioned east-west big box business during 2010, intermodal revenues improved by $27.2 million or 9.8 percent,” Pacer said.
It also cut selling and administrative costs by 7 percent, and more than doubled operating margin and income. Daniel W. Avramovich, chairman and CEO, said “the significant improvement in operating income is a nice reflection of the strides we have made” in cost control, allocating its capacity and delivering service.
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