First Quarter Hard on Ryder

Ryder System is slashing its first quarter earnings estimates by roughly half due primarily to the beating its fleet management division is taking from the slowing economy.

Ryder System, a supply chain logistics company that specializes in managing and leasing truck capacity, said the length and depth of the freight recession resulted in reduced customer demand for new leases and in more customers downsizing their fleets. Customers are also driving significantly fewer miles with their existing fleets, which lowers its variable revenue and fuel gallons sold, the company said.

Ryder anticipates the current state of the economy to continue throughout 2009.

“During the first quarter, we saw further material reductions in freight volumes,” said Ryder Chairman and Chief Executive Officer Greg Swienton. “As a result of this more severe downturn in freight activity, we’re now seeing reductions in Ryder's lease product line resulting in fewer leased units and lower usage of the vehicles currently under contract. We expect these impacts to continue throughout the year.”

The company also anticipates, however, that 2009 cash flow will improve from previous estimates as a result of lower capital expenditures, lower expected pension contributions, and reduced cash taxes due in part to recent government economic stimulus packages.