04 February 2010

Menlo Worldwide Logistics grew both new and existing business in 2009

Con-way Inc. has reported a net loss for the fourth quarter of 2009 of US$1.9 million. The results compare to a fourth quarter 2008 net loss of US$43.0 million. Revenue for the 2009 fourth quarter of US$1.12 billion was essentially even with last year’s fourth quarter. Operating income in the 2009 fourth quarter was US$17.3 million compared to an operating loss of US$35.2 million in the fourth quarter a year ago. Excluding special items, declines in operating income at Con-way Freight and Con-way Truckload were partially offset by improved operating income at Menlo Worldwide Logistics.

For the full-year 2009, Con-way reported a net loss of US$110.9 million. This compares to full-year 2008 net income of US$67.0 million. Revenues for the full-year 2009 declined to US$4.27 billion from US$5.04 billion in 2008, primarily reflecting the effect of weak pricing driven by surplus trucking industry capacity. The operating loss of US$25.9 million for 2009 compares to operating income in 2008 of US$192.6 million.

Excess capacity remains a problem for the LTL and truckload markets which continues to suppress profit recovery. Con-way Freight, the Company’s less-than-truckload operation, saw pricing stabilise somewhat in the fourth quarter, albeit at a lower level.

While yields were down compared to last year, increased tonnage levels have enabled better utilisation of rolling stock capacity. However, with the LTL market’s persistent over-supply, opportunities to improve margin will be difficult.

Con-way Freight will continue to refine its network to drive cost savings and service improvements, through initiatives such as line-haul re-engineering which accelerated transit times for 460 US cities while reducing operating expense.

Menlo Worldwide Logistics culminated the year with a solid fourth quarter performance. The Company grew both new and existing customer business in 2009.

Con-way Truckload weathered difficult market conditions to turn in a commendable performance for the quarter. The Company benefited from several strategic decisions that have improved asset utilisation and strengthened its position as a premium service provider. Its expansion into regional operations is showing good early returns. As capacity continues to be rationalized, early activity in January shows prices firming and demand strengthening.

Segment results in Q4 2009 for Con-way’s principal operations were as follows:

Con-way Freight, the Company’s less-than-truckload operation, reported operating income of US$2.8 million compared to an operating loss of US$9.4 million in the year-ago period. Results were adversely affected by US$2.6 million of costs for the administrative outsourcing initiative, and from continued weak LTL industry pricing, but benefited from employee-related cost saving initiatives implemented earlier in the year. Operating income in the same period of 2008 was lower due to US$21.3 million of operational restructuring charges. Revenue of US$683.9 million saw a 6.8% increase over last year’s fourth quarter revenue of US$640.3 million. Tonnage per day increased 20.6% over the previous year fourth quarter. Yield declined 14.4% from the previous year fourth quarter, primarily reflecting the supply/demand imbalance and the resulting impact on pricing. Excluding the fuel surcharge, yield declined 11.7%.

For the fourth quarter of 2009, Menlo Worldwide Logistics, the Company’s global logistics and supply chain management operations, reported operating income of US$5.9 million compared to an operating loss of US$38.6 million in the fourth quarter of 2008. The 2008 period included US$42.7 million for impairment and acquisition related charges. Revenue of US$338.2 million was down 9.4% from the prior year fourth quarter revenue of US$373.1 million. The decrease primarily reflects lower transportation management revenues. Net revenue reached US$133.1 million, a 2.9% increase from US$129.3 million in the previous year fourth quarter. The increase primarily reflects higher net revenue from warehouse management services.

For the fourth quarter of 2009, Con-way Truckload, the Company’s full-truckload transportation operation, reported operating income of US$8.2 million, a decrease of 43.3% compared to US$14.5 million in the previous year period, primarily reflecting lower recovery of fuel surcharge revenue and weaker pricing due to excess industry capacity during the quarter. Revenue reached US$93.6 million, after the elimination of US$46.1 million in inter-company revenues. This compares to 2008 fourth quarter revenue of US$110.9 million (after elimination of US$38.4 million in inter-company revenues) and reflects lower fuel surcharge recovery and the ongoing effects of the competitive pricing environment experienced throughout the year.