Good Times for CNF, Con-Way

Transportation conglomerate CNF Inc. and its LTL subsidiary Con-Way Transportation posted solid revenue and profit gains in the second quarter. Con-Way’s operating income reached all-time record highs and gave much needed support to CNF’s third-party logistics businesses.

CNF said its overall second-quarter net income topped $35.5 million on revenue of $1.44 billion, more than double its net income of $16.3 million from the same period last year, with revenues increasing 17%. For the first six months of 2004, CNF said net income reached $59.9 million – up 86% from the $32.2 million in earned through the first half of 2003 – with revenues climbing 14% to $2.79 billion compared to last year.

Con-Way’s second quarter revenue increased 21% to $541.4 million compared to the same period last year, with operating income climbing 54% to a new all-time record of $67.1 million. Those profits were desperately needed as CNF’s Menlo Worldwide Forwarding division lost $2.4 million – though that was down from the $11.5 million its lost in the same quarter last year.

Gerald Detter, Con-Way’s president & CEO, added that the tonnage per day climbed 16% for the company’s regional carriers, with revenue per hundred weight climbing 3%, and did not expect the sudden reversal of hours of service (HOS) changes in U.S. District Court last week to alter its growth projections. “The hours of service issue has been ongoing for several years and this latest development will have a minimal effect on Con-Way's operations,” he said.

For the third quarter, Detter expects tonnage to grow another 12% to 15%, revenues to climb another 15%, and yields to go up 3%, in light of continuing freight demand and consolidation within the LTL industry – of which the closure of USF Red Star is an example, he noted.

“We believe we’re going to continue to take market share, not only because of continued consolidation and the lack of clarity about the HOS rules, but also because we feel a shift in multistop freight from truckload to LTL carriers brought on by the HOS rule changes won’t reverse itself,” Detter said. “They can’t lower stop-off fees because that business is just not attractive to them – so that business will remain available to us going forward.”

CNF added that, for the corporation overall, it expects third-quarter earnings to reach between 71 and 81 cents per share.

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