Con-way lowers 3Q profit projections

Con-way Inc. has lowered its third quarter earnings expectations to be from $1.10 to $1.15 per share, down from its earlier estimates of $1.21 to $1.29 per share, primarily due to lower-than-expected LTL tonnage.

“We knew our focus on yield in the first half of the year would, by design, restrain our growth to some degree in later quarters,” said Con-way president & CEO Douglas Stotlar. “What we didn’t fully anticipate was a concurrent slowing of economic activity across our customer base. That exacerbated the situation and put further constraints on LTL volumes in a quarter that already faces an especially difficult comparison to the record-breaking third quarter we had in 2005.”

He said business volumes are below expectations at Con-way Freight, the company’s LTL operating unit, with a mid-single digit decline expected for the third quarter this year compared to the same quarter in 2005.

Stotlar added that changes to the recognition of earnings for Vector SCM, Con-way’s logistics joint venture with General Motors, will remove Vector’s expected profit contribution of five cents per share from Con-way’s third-quarter profit guidance. That’s because GM exercised its call right for those profits.

He said, however, that the loss of Vector’s warnings should be recouped from the sale of Con-way Expedite, which should add seven cents per share to the profit side of Con-way’s ledger.