Ryder Takes $7.8 Million Used Truck Loss in Fourth Quarter
February 07, 2001
Deterioration of the used truck market took a bite out of Ryder System’s profits in fourth quarter 2000.
The company's year-end financial results include a $7.8 million write down of used equipment, which it attributted to continued weakness in the market for used Class 8 highway tractors. Retail values, it said, were down some 30 percent from a year earlier.
Overall revenue for the fourth quarter was $1.36 billion, up slightly from $1.32 billion in fourth quarter 1999. Pre-tax earnings from continuing operations, before unusual items, were $48.2 million compared to $58.4 million for fourth quarter 1999.
Fourth quarter revenues for Ryder’s Dedicated Contract Carriage business segment were $137.7 million, down 1.4 percent from the same period in 1999. The contribution margin rose to 12.3 percent of operating revenue from 11.5 percent a year earlier.
In its Fleet Management Solutions unit, formerly called Leasing and Rental, fourth quarter revenue, excluding fuel, was $696.6 million, about the same as fourth quarter 1999. The contribution margin was 13.9 percent, compared to 13.6 percent for fourth quarter 1999.
In financial reports, the company noted that its primary focus for lease/rental is profitable growth, which will have a slowing effect on top-line growth in the near term. It also said that fuel revenue was up more than 19 percent from the previous year, but Ryder realized no additional margin from fuel price increases.
Ryder’s Supply Chain Solutions business, formerly Logistics Solutions, had fourth quarter revenues of $423.1 million, up 4.6 percent from the same period in 1999. It attributed revenue growth to the start-up of new business operations and expansion of business with existing customers, primarily in the electronics, high technology and telecommunications sectors. The unit’s contribution margin was 6.7 percent of operating revenue versus 5.8 percent in the same quarter of 1999.
Ryder’s revenues for the year were up nearly 8 percent, from $4.95 billion in 1999 to $5.34 billion. Pre-tax earnings from continuing operations, before unusual items, were $183.3 million compared with $193.6 million in 1999.
Despite the economic slowdown, Ryder System expects modest revenue growth for 2001 and slightly higher earnings. "In periods of economic slowdown, some customers are actually motivated to increase outsourcing," said President and CEO Gregory Swienton. "In addition, we are working diligently to grow our business in a profitable manner."