Con-way Freight 4Q results impacted by health care costs

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Con-way Inc. on Thursday, Jan. 13, provided an update on preliminary operating results for the fourth quarter of 2010 at Con-way Freight. The company’s less-than-truckload unit expects to report operating income of about $2 million. Operating income was affected by health care costs, which were $11 million higher compared to expense levels in the 2010 third quarter.

“The variance in fourth-quarter health care costs was a significant factor in lower operating profits at Con-way Freight,” says Douglas W. Stotlar, Con-way president and chief executive officer. “While we’re disappointed with these results, we are encouraged by the improvement in pricing and the progress of our operating cost-reduction initiatives begun in the third quarter. These actions, which have lowered costs in fundamental areas of the business, maintained steady momentum throughout the fourth quarter.”

Stotlar says the company began addressing health care cost issues at mid-year 2010, introducing new health care plan options and benefit package changes. While future health care costs are likely to remain uncertain, these changes, which took effect on Jan. 3, are intended to help mitigate future health care expense increases. “The magnitude of the increased health care expense outpaced the benefits gained from the reduced operating costs and higher pricing,” Stotlar says.

Con-way Freight also expects to report fourth-quarter 2010 revenue of $736 million, up 5.7 percent from the fourth quarter of last year. Weight per day was down 0.5 percent, while revenue per hundredweight, excluding the effect of fuel surcharge, was up 4.9 percent.