Ryder System Inc. on Wednesday, April 22, reported net earnings of $6.8 million for the three-month period ended March 31 compared with $56.1 million in the year-earlier period; net earnings in the current period include a charge for restructuring and other items of $6.9 million. Excluding these items, comparable net earnings decreased 76 percent to $13.7 million.
The company said the decline in comparable earnings reflects significantly lower pretax earnings in the Fleet Management Solutions (FMS) business segment driven by decreased global commercial rental and used vehicle sales results, higher pension expense and reduced contractual full-service lease business performance; to a lesser extent, earnings were impacted negatively by significantly reduced global automotive industry volumes.
Total revenue was $1.20 billion, down 22 percent from $1.54 billion; total revenue comparisons were impacted adversely by lower fuel prices and fuel volumes, as well as unfavorable foreign exchange rate movements. Operating revenue (revenue excluding FMS fuel and all subcontracted transportation) was $1.01 billion, down 14 percent compared with $1.17 billion, including the decline associated with unfavorable foreign exchange rate movements.
FMS business segment total revenue decreased 22 percent due primarily to lower fuel services revenue. FMS operating revenue declined 7 percent due to unfavorable foreign exchange rate movements and lower commercial rental revenue. Full-service lease and contract maintenance revenue were impacted negatively by lower miles driven by existing customers and an increase in customer fleet downsizing actions.
Supply Chain Solutions (SCS) business segment total revenue and operating revenue declined 28 percent due to lower global automotive volumes, unfavorable foreign exchange rate movements and lower fuel volumes and fuel prices. Dedicated Contract Carriage (DCC) business segment total revenue and operating revenue decreased 16 percent, reflecting the pass-through of lower fuel prices and lower freight volumes.
“For the past two-and-a-half years, we delivered earnings growth through a prolonged freight recession which primarily impacted Ryder’s transactional commercial rental and used vehicle sales product lines,” said Greg Swienton, chairman and chief executive officer of Miami-based Ryder. “The further reductions in freight volumes that the transportation industry encountered in the first quarter have extended these negative impacts into our contractual Fleet Management Solutions product lines. In particular, our full-service lease customers are now operating fewer-than-anticipated leased units and are driving fewer miles with the vehicles they currently have under contract. However, our contractual Supply Chain Solutions and Dedicated Contract Carriage offerings performed largely in line with our already lowered expectations.”
Swienton said the current economic environment has worsened and is significantly less predictable. “Despite these factors, based on the nature of our business model, we expect full-year free cash flow to remain strong and significantly improve versus our prior forecast,” he said.