Werner Bracing for Impact of Fuel Prices
Posted on: Wednesday, 19 October 2005, 18:00 CDT
By Steve Jordon, Omaha World-Herald, Neb.
Oct. 18--Werner Enterprises Inc.'s third-quarter profits matched its year-ago performance, with higher fuel expenses hurting earnings less than expected.
But the Omaha-based trucking company said Tuesday that fuel costs probably will hurt earnings more this fall, partly because the fuel surcharge method used by most trucking companies can't handle recent rapid increases.
"If the shipping and truckload industries do not work together to address this problem, they risk losing a substantial amount of truck capacity," Werner warned in its third-quarter report.
For the three months that ended Sept. 30, Werner reported net income of $24.5 million on $504.5 million in revenue, compared with $24.3 million in net income on revenue of $425.4 million last year. Net income was 30 cents per share in both periods.
Revenue was up 19 percent, but expenses were up 25 percent, including a 68 percent increase in fuel costs.
For the first nine months of 2005, net income was $69.7 million, or 86 cents per share, on revenue of $1.4 billion, compared with net income of $81.5 million, or 76 cents a share, on revenue of $1.2 billion a year earlier.
Werner had expected high fuel costs to cut third-quarter earnings by 6 to 7 cents per share, but the actual impact was 4 cents because of surcharges, improved truck mileage and other factors.
This fall, Werner expects high fuel costs to cut earnings by 8 to 11 cents a share.
Werner said surcharges are based on crude oil prices, while recent high prices are due to hurricane-caused fuel shortages. Surcharges do not recover enough to cover truckers' costs, Werner said, and shippers won't benefit as fuel prices drop.
The company said it is meeting with its customers to explain the problem and find solutions.
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WERN,
Source: Omaha World-Herald
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