Major Carriers Report Stellar First Quarters
CNF Inc., Palo Alto, CA, a regional trucking, air freight and ocean freight company, reported a 16 percent increase in earnings for the first quarter, which ended March 31. Its net income was $35.8 million, compared with $31 million in 1Q 1999.
CNF's 1Q 2000 operating income was $73.4 million, compared with $66.1 million in the same quarter a year ago, an 11 percent increase. Revenue was $1.46 billion, up 17 percent.
Emery Worldwide, CNF's air freight company, reported a 1Q 2000 operating income of $7.4 million, more than double the $3.6 million it earned in the same quarter a year ago. Revenue totaled $601.2 million, up 14 percent.
"Revenue and profit growth at Emery were driven by our international operations," said Gregory L. Quesnel, CNF president and chief executive officer. "Results from our North American operations were disappointing and were affected by higher-than-normal expense for aircraft due to planned maintenance aimed at improving fleet productivity."
North American air freight revenue was flat in the 1Q, while international air freight revenue grew 25 percent.
CNF's other operations had operating income of $311 million in the 1Q. This segment includes income from the operations of the Priority Mail contract and Road Systems, a trailer manufacturing company. The Priority Mail contract recorded break-even 1Q results on revenue of $135.2 million, which was up 14 percent from the same quarter a year ago.
As previously announced, the company continues to negotiate with the U.S. Postal Service to resolve pricing and operational issues involving the Priority Mail contract.
United Parcel Service Inc., Atlanta, also reported great results for its 1Q 2000. It experienced a 23 percent gain in international export package volume and a 63 percent increase in net income.
The package delivery company also announced that it plans to use proceeds from its initial public offering to repurchase up to $1.2 billion in Class A and Class B common shares.
Boosted by strong growth in its share of the high-margin international package shipping market, UPS earned $813 million compared with $499 million a year ago.
The results reflected a net gain of $139 million from several nonrecurring items -- including gains from venture fund investments and the sale of a truck leasing unit -- despite a charge for retroactively creating certain full-time hourly jobs. Excluding the nonrecurring items, UPS said net income rose 35.1 percent to $674 million, making it the best quarter in the company's history.
"Our continued superior financial performance demonstrates the strength of the core package delivery business and our global competitive position. It also reflects the promise of new opportunities," said Jim Kelly, UPS chairman and CEO. "Around the world, traditional and dot-com companies alike are searching for ways to make fulfillment and supply chain management more efficient, and that plays directly to UPS' strength."
In addition, for the third consecutive quarter, UPS' average daily package volume around the world rose 5.8 percent, including the 23 percent growth in international export volume. The consolidated domestic and international volume climbed to an average 13.1 million pieces a day, up from 12.4 million a day reported for 1Q 1999.
The company's U.S. package revenues grew by 11.7 percent to $5.8 billion, including a 14.3 percent gain in Next Day Air revenues, a 13.6 percent increase in deferred two- and three-day air revenues and a 10.4 percent increase in ground revenues. Operating profit for U.S. operations rose 13.2 percent, to $893 million. On the international front, revenues increased 15.6 percent compared with the prior-year period, to $1.02 billion, thanks to a 19.3 percent jump in international export revenue.
Not all companies saw such stellar results, however.
Airborne Freight Corp., Seattle, for example, which operates under the name Airborne Express, reported first quarter 2000 net earnings of $32.1 million, up from last year's 1Q net income of $25.2 million. However, the $32.1 million was based on a credit due to a change in accounting for certain engine overhaul costs. Before this credit was applied, net earnings were $17.9 million.
Total revenues for the quarter were $812.5 million, an increase of 5.6 percent over 1999 1Q revenues of $769.3 million. Domestic revenues were up 6.5 percent to $725.2 million, compared with last year's figure of $681.3 million.
International revenues for this period decreased 1 percent to $87.2 million, compared with $88.1 in 1999.
The total number of shipments for the 1Q increased 3.5 percent to 83.4 million. Domestic shipments were 81.8 million -- up 3.6 percent -- and international shipments were 1.6 million , a decrease of 3.2 percent over 1999 results.
"The escalating cost of jet fuel obviously had a negative impact on operating results in the first quarter," said Roy Liljebeck, Airborne's chief financial officer.
"Although domestic shipments in the first quarter grew only 0.5 percent on a per day basis, it was the first quarter in the last four quarters that some growth was experienced. While very modest, it is hopefully a sustainable trend that can be built upon. Also encouraging is the 1 percent improvement in productivity achieved in the first quarter."
Finally, ABF's business-to-consumer Airborne@home product is beginning to build momentum. The product, which was introduced last year, combines Airborne's transportation network and the residential delivery shipping abilities of the USPS to provide delivery from virtually any business to any residential destination in the United States.
According to insiders, ABF's product has ramped up volumes from about 10,000 pieces per night in March to about 15,000 per night in the second week of April. The April run rate equates to conservative annualized revenue of about $21 million.