Ryder System said it saw a few signs of recovery, but its first quarter revenues still show the effects slow economic conditions
in the U.S. and several other countries where the company does business.
First quarter revenue was $1.15 billion, down 10% from the same period a year ago. Pre-tax earnings before unusual items increased 47% to $25.1 million.
The company said a sluggish economy meant reduced transportation miles run and continued weak leasing and rental demand, though rental utilization was slightly better than anticipated. The economic downturn has also caused volume reductions in the Dedicated Contract Carriage business segment, in some parts of the U.S. Supply Chain Solutions business segment and in international areas with weaker economies, such as Brazil and Argentina.
Ryder President and CEO Gregory Swienton said they did see a few signs of improvement. Among them were a slight increase in rental utilization, a substantial improvement in the Supply Chain Solutions business segment's margins, and an increase in used truck sales volume.
Dry revenues (i.e. revenues excluding fuel) in the company’s Fleet Management Solutions lease and rental unit totaled $630.4 million, down 6% from first quarter 2001. Primarily because of price reductions, fuel revenue decreased 26% in the first quarter of 2002 compared with same period of 2001.
FMS net before taxes was $36.6 million, down 7% from a year ago. Ryder said this was due primarily to reduced revenue levels, the impact of lower pricing of used vehicles held for sale (both owned and leased) and increased pension costs, offset partially by
reductions in operating expenses stemming from Ryder's cost management and process improvement initiatives and lower interest costs.
The Supply Chain Solutions unit had first quarter revenues of $447.1 million, down 12% from the comparable period in 2001. First quarter operating revenue was $245.9 million, down 8%. Revenue declined due to volume reductions, primarily in the electronics, high tech and telecommunications sector and continued economic softness in Brazil and Argentina. Revenue also declined due to cancellation of certain unprofitable business, Ryder said. Net before taxes was a deficit of $2.2 million, compared with a deficit of $8.6 million in the same quarter of 2001. The improvement was due primarily to better operating performance across all industry groups (particularly automotive) reflecting margin improvement initiatives, elimination of certain unprofitable business and
cost management controls implemented throughout the SCS segment.
Revenues for Ryder’s Dedicated Contract Carriage segment totaled $125.6 million, down 6% from the first quarter of 2001. Net before tax decreased to $5 million, compared with $5.7 million in the year-earlier period. The decreases were due to reduced activity and volumes of DCC business attributable to the current economic environment, Ryder said. Additionally, higher safety and insurance costs offset improvements in other operational areas.