Con-way shares skid on growing economy worries
(Reuters) - A profit miss, lighter-than-expected freight volume and concerns about the U.S. economy drove shares of trucking company Con-way Inc (CNW.N) down more than 15 percent on Wednesday.
Con-way reported higher earnings after the market closed on Tuesday but missed the average Wall Street forecast.
Company executives on Wednesday said freight volumes were flat in the first half of the year compared with a year earlier.
"They're saying freight volumes are pretty anemic," said Toronto-based BMO Capital Markets analyst Jason Granger. The company told analysts in a conference call that "it started the year stronger and now we've hit a soft patch," he said.
On top of Con-way's profit miss, analysts said Wednesday's report that U.S. manufacturing shrank for the second month in a row in July compounded worries about the slowing pace of economic growth.
Other trucking stocks are posting smaller losses, but their shares also declined on concerns about industrial activity in the second half of the year, said Benjamin Hartford, senior research associate at Robert W. Baird in Milwaukee.
"It's a highly uncertain environment and there's very little visibility to near-term demand," Hartford said. "Investors are trying to position themselves defensively, and trucking companies are more cyclically sensitive, so that's why we're seeing them weaker than the broader market."
Tonnage at Con-way Freight, the unit that accounts for 60 percent of Con-way's revenue, is running relatively flat year over year, executives told analysts on the conference call.
"The real ability to really expand margins and get back to historic levels depends on the growth environment, and we haven't been seeing much of a growing environment this year," Chief Executive Doug Stotlar said.
The company cited price increases to shippers and cost controls for its earnings increase.
Con-way shares slid 15.9 percent to $29.97 in afternoon trading, making it one of the biggest percentage losers on the New York Stock Exchange.
Some other trucking companies reported quarterly profits that topped estimates, including Ryder System Inc (R.N) and Swift Transportation Co (SWFT.N), but on cost controls, fleet downsizing and rate increases rather than an increase in shipping volume.
Arkansas Best Corp (ABFS.O) reported above-forecast results on Tuesday on improved pricing [ID:nL4E8IV5I8], but its shares were down almost 15 percent on Wednesday.
Granger expects Con-way and other trucking companies to be able to keep pushing through moderate rate increases to shippers.
Capacity remains tight, as many trucking companies shut down in the recession and survivors continue to reduce fleets.
(Reporting by Lynn Adler in New York; Editing by Lisa Von Ahn, Sofina Mirza-Reid and John Wallace)
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