J.B. Hunt 1st quarter profit slides
Trucking and intermodal transportation power J.B. Hunt said Monday that first quarter operating profit was $57 million, a 21 percent drop from the $72 million it earned in the same 2008 period, as revenue fell 18 percent to $723 million.
The Lowell, Ark.-company attributed the revenue decline to lower fuel surcharges as fuel costs have abated, and to downsizing of its over-the-road tractor fleet in the face of lackluster shipping demand. Operating revenue, excluding fuel surcharges, was off 8 percent from the first quarter of 2008.
Higher volumes in intermodal and outsourced transportation management services partially offset slower business for the dedicated contract carriage and trucking segments. But the improved intermodal volumes did not translate to the bottom line. J.B. Hunt said the main reason operating income declined was due to a 20 percent drop in intermodal operating income (10 percent revenue decline) and a loss in the truck segment.
Nonetheless, J.B. Hunt noted that its intermodal and dedicated trucking businesses, which constitute 80 percent of its revenue, have remained profitable during the economic crisis. It said the intermodal segment continues to make inroads in the Eastern portion of the United States, where volumes were up 38 percent. Pricing was flat, but lower fuel surcharges impacted overall revenue.
Operating income for the dedicated, or leased, trucking service was down 5 percent in the quarter to $17.4 million, with revenue down 21 percent to $179 million. One-third of the profit decline was the result of a $385,000 bad debt charge from a small client's sudden bankruptcy.
J.B. Hunt's trucking business lost $5.8 million compared to a $500,000 loss in the first quarter of 2008. Revenue plummeted 45 percent. The motor carrier sidelined 23 percent of its fleet, or 948 tractors, to reduce under utilized assets.
The company benefited on the cost side from lower debt and interest rates.
Overall, net earnings were $30.8 million compared to $36.4 million one year ago.