After-tax charge lowers Ryder’s 2Q net earnings

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Ryder System Inc. today, July 23, reported net earnings for the three-month period ended June 30 were $62.9 million, down 3 percent from $65.1 million in the year-earlier period. Earnings in the current period included an after-tax charge of $6.8 million in the company’s Supply Chain Solutions operations in Brazil to adjust accruals and tax deferrals related to prior years, the company said; excluding this charge, comparable net earnings were up 7 percent to $69.8 million. The Fleet Management Solutions business segment demonstrated significant earnings improvement in the quarter, the company said.

Total revenue for the second quarter of 2008 was $1.66 billion, flat compared with the same period of last year. Total revenue was impacted by a previously announced change from gross to net revenue reporting in a subcontracted transportation agreement, which has no impact on operating revenue or earnings. Operating revenue (revenue excluding FMS fuel and all subcontracted transportation) was $1.22 billion, up 5 percent compared with $1.16 billion in the year-earlier period. Both total and operating revenue benefited modestly from favorable foreign exchange rates related to international operations.

FMS business segment total revenue increased 16 percent due to higher fuel services revenue, as well as contractual revenue growth of 5 percent. SCS business segment total revenue declined 25 percent due to a previously announced change from gross to net reporting, as noted above, while operating revenue grew 6 percent. Dedicated Contract Carriage business segment total and operating revenue increased 2 percent as the pass-through of higher fuel costs more than offset the impact of the nonrenewal of certain customer contracts.

“The Ryder team responded effectively and delivered another solid quarter in a challenging operating environment,” said Greg Swienton, chairman and chief executive officer of the Miami-based company. “Strong operational execution enabled us to overcome the impacts of multiple expected automotive strikes in North America and unexpected customs and cross-border strikes in South America, as well as operational issues in Brazil. Looking at the operating trends of the business, we are particularly pleased with the very strong performance within Fleet Management Solutions. That business segment demonstrated organic and acquisition-related growth within the contractual full-service lease product line, rental improvement and growth in contract maintenance.”

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Commenting on Ryder’s outlook, Swienton said the company is continuing to monitor and adjust to the effects of a number of outside factors. “These are related primarily to the general economy, strikes and known temporary automotive plant shutdowns,” he said. “Based on the capabilities of our improved business model, including the very strong performance of our Fleet Management Solutions business segment, we are still forecasting solid earnings results despite these conditions. We expect to realize good contractual revenue growth and to continue to execute on our financial leverage objectives.”