Con-way Inc. on Wednesday, Oct. 22, reported operating income in the 2008 third quarter was $78.9 million, an increase of 16.6 percent compared to $67.7 million earned in the third quarter a year ago. Revenue in the 2008 third quarter was $1.37 billion, an increase of 23.3 percent from last year’s third quarter revenue of $1.11 billion, reflecting organic growth and the effect of acquisitions completed in 2007, according to the company.
“Our core operations turned in results that were consistent with our updated earnings guidance and, as expected, were affected by weakening demand and a difficult pricing environment,” said Douglas Stotlar, president and chief executive officer of San Mateo, Calif.-based Con-way Inc. “Lower-than-anticipated employee-related costs and a lower tax rate in the quarter led to results that were somewhat better than earlier expectations.”
Con-way Freight, the company’s less-than-truckload and largest business unit, recorded an increase in tonnage for the quarter, but profit growth remained constrained by weakening demand and pricing in a highly competitive business climate. “Demand decelerated as the quarter proceeded, which created additional pressure on pricing,” Stotlar said. “Productivity measures remained strong as we saw good operational execution. Our Freight team is doing an excellent job delivering consistent, reliable service to customers in a very challenging environment.”
Menlo Worldwide Logistics achieved double-digit growth in net revenues, but saw income decline below last year’s third quarter; among the factors was an operating loss in China as integration expense exceeded expectations. “Additional costs for operational integration have extended the profit horizon in China, but we are making progress and expect to turn the corner by the end of the year,” Stotlar said. Menlo’s results in the quarter also were affected as customers experienced continuing pressures to reduce supply chain costs in response to the economic downturn, he said.
Con-way Truckload turned in a commendable performance in a weakening environment for truckload freight, Stotlar said. “We continued to realize the benefits of synergy between Con-way Truckload and our freight and logistics units,” he said. “The declining cost of fuel also aided Truckload’s earnings, given the nature of their fuel cost-recovery mechanisms.”