Old Dominion reports lower 4Q net income, revenue

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Old Dominion Freight Line today, Jan. 29, announced financial results for the fourth quarter and year ended Dec. 31:

  • For the quarter, revenue was $335.8 million, a decline of 6.4 percent from $358.7 million for the fourth quarter of 2007. Net income was $11.0 million compared with $15.7 million; and
  • For 2008, revenue increased 9.7 percent to $1.54 billion from $1.40 billion for 2007. Net income decreased 4.4 percent to $68.7 million from $71.8 million.
  • “Old Dominion’s fourth-quarter results reflect the depth of this recessionary economic environment and the impact it is having on our shipment and tonnage levels,” said Earl Congdon, executive chairman of the Thomasville, N.C.-based company. “When we revised our annual earnings guidance on December 23, we projected a 6 percent to 7 percent decline in comparable-period tonnage for the fourth quarter based on per-day tonnage trends at that time. We finished December stronger than we had anticipated, and as a result, our fourth quarter tonnage declined only 4.9 percent. Despite this decline, we were able to maintain our pricing discipline and increase our market share by continuing to provide superior service to our customers.”

    Congdon said he believes that Old Dominion’s commitment to providing best-in-class service, especially in this environment, is a key differentiator for the company. “Shippers have come to expect and rely on consistent service in order to keep their supply chains functioning as cost-effectively as possible, especially in periods with reduced shipment volumes,” he said. “We believe the consistent execution of our service strategy will allow us to continue to gain market share while enhancing our ability to take advantage of growth opportunities following an economic recovery or industry consolidation.”

    Congdon said that in addition to the company’s pricing discipline, Old Dominion focused on maintaining labor costs at the appropriate levels for its volumes. while effectively managing its variable costs. “As a result, we continued to improve the efficiency of our operations compared to the fourth quarter of 2007 and offset a portion of the significant deleveraging effect of the decline in tonnage,” he said. “We increased our laden-load average, pickup-and-delivery shipments per hour and platform pounds per hour. Therefore, direct labor costs improved as a percent of revenue. These accomplishments were supported by our long-term and ongoing investments in technology and operating infrastructure.”

    Congdon said that although the company’s tonnage did not decline as much as expected for the fourth quarter, the rate of comparable-period decline in tonnage expanded each month of the quarter. “Tonnage has not improved in early 2009, but severe winter weather in many parts of the country has reduced the comparability of our January 2009 results to either January or December of 2008,” he said. “Based on the current economic environment, however, we are not optimistic about the prospects for significant near-term improvement in demand. We believe our current lack of visibility for 2009, due to a highly uncertain economy, makes it impractical to provide financial guidance, and accordingly, we are suspending this practice until further notice.”

    Congdon said Old Dominion doesn’t underestimate the challenges the economic environment poses for its customers and its operations. “However, we believe we have demonstrated both our preparedness to weather these conditions and our ability to produce long-term profitable growth through the strengths of Old Dominion’s business model, financial position, experienced management team and dedicated employees,” he said.