One truck maker has reported its third quarter profit doubled and is considering the sale of its used truck business, while one of the nation’s largest trucking fleets has reported new records for the period in several areas.
More Dough Despite Lower Truck Sales
The parent to Volvo Trucks and Mack Trucks, Volvo AB (VOLVY), reported net income of 3.07 billion Swedish kronor ($363.2 million), up from 1.50 billion kronor the same time last year, even as truck order intake decreased by 15% and order intake of construction equipment fell by 34%.
Officials said the increase in profitability is due somewhat to favorable currency rates.
Worldwide, the Swedish truck maker said it had third quarter orders of 42,648 trucks and deliveries of 47,338 trucks, 3% higher than in the third quarter of 2014. In the third quarter of 2015, truck deliveries rose by 13% in Europe and by 10% in North America. Deliveries in South America were down by 40%.
In North America orders came down by 40% in total, with Volvo Truck orders down 30% and Mack Trucks orders down by 51%. The decline is an effect of dealers focusing on reducing their inventories and the comparison with a good quarter last year, according to Volvo.
“During the third quarter, the retail activity in the dealerships in North America remained solid on the back of a good freight environment and customer profitability,” Volvo said in its report. "The total market forecast for 2015 remains at close to record level of 310,000 heavy-duty trucks. For 2016 we expect demand to continue on a good, but lower level. The market for 2016 is forecasted to be at about 280,000 trucks.”
The earnings report comes as Volvo has been working to restructure in order to become more profitable. It is only halfway to meeting its financial goals of a four-year cost-cutting program that targets 10 billion kronor in annual savings.
Volvo also said it is evaluating a sale of its North American used truck business, Arrow Truck Sales, including its customer finance portfolio. Arrow Truck Sales has 250 employees and a finance portfolio of approximately $250 million, according to the company.
More details are on the Volvo website.
Landstar Sees Record Profit, Revenue
The asset-light trucking company Landstar System Inc. (LSTR) reported record third quarter net income of $39.3 million, or 90 cents per diluted share, on record third quarter revenue of $842 million. Revenue and diluted earnings per share for the 2015 third quarter were the highest third quarter in the company's history.
The figures compare to net income of $36.8 million, or 82 cents per diluted share, on revenue of $819 million in the 2014 third quarter.
Gross profit, which Landstar defines as revenue less the cost of purchased transportation and commissions to agents, was $126.8 million compared to $121.1 million in the 2014 third quarter. Operating margin was 50.4%. Both are also the best third quarter amounts in Landstar history, according to the company.
Truck transportation revenue hauled by independent contractor truckers and truck brokerage carriers in the 2015 third quarter was $779.8 million, or 93% of revenue, compared to $767.5 million, or 94% of revenue, in the 2014 third quarter.
Truckload transportation revenue hauled via van equipment was $466.2 million compared to $458.5 million a year earlier
Truckload transportation revenue hauled via unsided/platform equipment was $293.3 million compared to $287.9 million in the 2014 third quarter.
Revenue hauled by rail, air and ocean cargo carriers was $50.5 million, or 6% of revenue, compared to $41.7 million, or 5% of revenue, compared to the same time in 2014.
"Demand for Landstar's services thus far in October remains strong. I expect the number of loads hauled via truck in the 2015 fourth quarter to increase in a mid-single digit percentage range over the 2014 fourth quarter,” said Landstar President and CEO Jim Gattoni. “As it pertains to revenue per load on loads hauled via truck, year-over-prior-year comparisons continue to be difficult due to the all-time high revenue per load reported in the 2014 fourth quarter, along with the effect of lower diesel fuel costs on loads hauled via truck brokerage carriers in 2015."
He said during the first few weeks of fiscal October, revenue per load on loads hauled via truck is consistent with that experienced in fiscal September, yet lower than that of fiscal October 2014.
“I do not expect a significant change in these recent trends over the balance of the 2015 fourth quarter. As such, I expect revenue per load on loads hauled via truck in the 2015 fourth quarter to be below the 2014 fourth quarter in an upper-single digit percentage range,” Gattoni said.
Assuming the current environment continues throughout the 2015 fourth quarter, Landstar anticipates revenue for the 2015 fourth quarter to be in a range of $815 million to $865 million and, diluted earnings per share to be in a range of 85 cents to 90 cents per share."
There is more information on the Landstar website.