Werner sees tough times ahead

Jan. 24, 2008
Truckload carrier Werner Enterprises believes freight demand will remain soft for at least the early part of this year – the continuation of a trend it experienced

Truckload carrier Werner Enterprises believes freight demand will remain soft for at least the early part of this year – the continuation of a trend it experienced over the last three months of 2007.

In its year-end earnings report, Werner said load counts for its dry van network of non-dedicated fleet trucks were lower nearly every week in October, November, and December 2007 compared to the same months over the previous four years.

So far in January this year, compared to the same period in January 2007, load counts are approximately equal to levels a year ago for Werner’s regional and expedited fleets, but are weaker – and are continuing to weaken – for its medium-to-long-haul dry van operations. The carrier added that continued freight demand softness and the temporary increase in the supply of trucks caused by the industry’s truck pre-buy in 2006 will make for extremely challenging freight market conditions.

Significantly higher fuel prices aren’t helping Werner’s bottom line either – it reported a five-cent per share negative impact on earnings in fourth quarter last year compared to fourth quarter in 2006 due to higher diesel fuel costs, with the hit rising to nine cents per share for all of 2007 compared to 2006.

So far, though, the carrier is keeping its head above water despite falling revenues. In the fourth quarter last year, revenues, excluding fuel surcharges, decreased 4% to $435 million, while earnings declined 30% to 22 cents per share – which include a six-cents per share charge for the anticipated settlement of an income tax issue.

For the full year, Werner said revenues, excluding fuel surcharges, decreased 1% to $1.76 billion in 2007 compared to $1.79 billion in 2006, with earnings falling 18% to $1.02 per share vs. $1.25 in 2006.

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