Roadway first-half net zooms 265 percent

Roadway first-half net zooms 265 percent

Copyright 2003, Traffic World, Inc.

Roadway Corp.''s reported net income rose to $6.3 million on a 13 percent rise in revenue to $751.5 million for its 12-week second quarter ended June 21, compared with $5.7 million earnings on $656 million for the year-ago second quarter.

For the 24 weeks constituting its first half, Roadway''s net income was $14.3 million, an increase of 265 percent when compared with its $3.9 million net income for the same period in 2002. Roadway''s first-half revenue was $1.49 billion, up 19 percent from $1.25 billion revenue for the first half last year. The first half of 2003 contained four more working days than the same period in 2002.

"Despite continuing weakness in the economy and excess capacity that still remains following the closure of Consolidated Freightways, Roadway Corp. achieved a 13 percent increase in revenue and a 43 percent increase in income from continuing operations," Roadway President and CEO James D. Staley said in a statement. Staley said Consolidated Freightways'' business was "quickly and completely absorbed" due to economic softness and surplus capacity. By April, continuing economic slowness and seasonal shipping patterns freed additional capacity to the marketplace increasing pricing pressures, Staley said.

Roadway is "committed to compensatory rate levels" and is taking a general freight rate increase of 5.9 percent to improve revenue yield, effective this week, he said.

"In the second quarter, Roadway Express also began to experience a shift in its freight mix, where the company saw some loss of higher-yielding time-critical freight and changes in shipment size and length-of-haul that resulted in revenue rate deterioration," Staley said. "This was particularly evident in the retail segment where (Roadway) Express has a significant portion of its business. We are taking steps to make certain that freight is correctly priced and to review all new business to ensure it is properly contributing to the company''s profitability."

Without the fuel surcharge (which is declining), Roadway''s net yield rose by about 1 percent in the second quarter, a development that company officials called a result of tougher pricing competition in the market.

New Penn, Roadway''s regional Northeast unit, also operated in a difficult environment. New Penn posted an 88.8 OR with $5.6 million operating profit on $50.4 million revenue in the second quarter. New Penn in the past had posted ORs as low as 79 but has felt the impact of the sluggish economy in one of the most competitive transportation markets in the country.

"What we really saw was a little better pricing but revenue was down about 1 percent," said Roadway Corp. CFO J. Dawson Cunningham in an analysts'' conference call.

Roadway is predicting approximately 12 percent revenue growth in the third quarter. For the full year it is anticipating revenue growth around 9 percent. Fourth-quarter and year-over-year comparisons will be more difficult, as the impact of CF''s closure already was included in the fourth quarter of 2002 and the period will have four less working days than the second half of 2002, Staley said.