J.B. Hunt Profits Fall on Weak Demand, Write Downs
J.B. Hunt experienced a drop in revenue and earnings in the second quarter, due to a $10.3 million equipment write down and weaker demand in the truck secto
J.B. Hunt experienced a drop in revenue and earnings in the second quarter, due to a $10.3 million equipment write down and weaker demand in the truck sector
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The carrier's net earnings were $24 million, about half of what it brought in during the second quarter of last year. Operating income was also down 50 percent to $47 million from $94 million in the same quarter of 2008.
Operating revenue slid as well, falling 21 percent to $770 million from $977 million in 2008. The company attributes the decline to lower fuel surcharge revenues, which reflect lower fuel costs.
The truck segment suffered the most this quarter, bringing in $108 million, a 44 percent decrease in revenue. The significant decline in truck revenues was primarily a result of the company's ongoing long-term strategy to reduce the size of the segment's tractor fleet and due to weaker demand brought about by the current economic recession.
Meanwhile, the company's Integrated Capacity Solutions was up 28 percent in revenue and 85 percent in operating income on an increase in load volume. Revenue increased at a slower rate than load volume due primarily to lower fuel prices during the current quarter 2009, compared to the same period of 2008.
"While current quarter volumes did show seasonal improvements across our four business segments, pricing has been challenging following the implementation of various bids and proposals submitted earlier in the year from Intermodal and Truck customers," said Kirk Thompson, president and CEO. "We are not pleased with the resulting pricing in these two segments. While some in the industry have described the pricing environment as irrational and unsustainable, it is reflective of the sharp contractions in freight volumes this year. We would expect pricing to show some improvement with increased demand or as capacity continues to exit the market."
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