Parent of Akron's Roadway says its regional unit hurt by weaker Midwest economy
YRC Worldwide Inc., parent of Roadway in Akron, sees no sign that a yearlong slump in U.S. trucking will ease, said Bill Zollars, chief executive of the largest U.S. trucker.
''Last year, the economy started to weaken at the beginning of October,'' Zollars said in a conference call. YRC, of Overland Park, Kan., expected conditions to improve by now and they haven't, he said. ''That has us concerned.''
The outlook could make it tougher for YRC to stem four straight quarters of falling sales and net income that have contributed to a 28 percent drop in shares this year. YRC posted a 58 percent decline in third-quarter profit in its financial report released Thursday.
The results were dragged down by its regional trucking division, which was hurt by a weakening economy in the Midwest, Zollars said.
Clients are being pinched, too. The trucker will reprice contracts for some ''unprofitable customers'' at its USF Holland and Reddaway divisions in the Midwest, Zollars said.
YRC rose $1.30, or 5 percent, to $27.26 in trading Friday. Earnings were released after Thursday's trading. YRC's regional division, its second-largest, ''will likely get worse before it improves,'' said Edward Wolfe, a Bear Stearns & Co. analyst who is based in New York and rates YRC ''underperform.''
Wolfe said YRC regional's main business where each truck carries goods from more than one customer, known as less-than-truckload, will likely remain weak and make change ''difficult'' at the company's Midwestern divisions.
YRC and other large U.S. trucking companies have seen freight demand decline as a housing slump has reduced shipments of construction materials and home furnishings. Con-way Inc., J.B. Hunt Transport Services Inc. and Landstar System Inc. all posted declines in third-quarter profit.
Zollars said the regional trucking unit ''performed well below expectations.''