A.M. Executive Briefing - June 28
This Morning's Headlines:
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Today's The Day When The Fed Decides Interest Rates
Various trucking companies and industry suppliers have reported slowed growth in recent months as the Federal Reserve's relentless campaign of pushing up interest rates began to slow freight activity. This afternoon, the Fed is widely expected to say that it will not keep pushing rates higher, at least for now.Watch to see if financial markets react with relief and push stock prices out of their year-to-date doldrums. This could, however, allow the economy to regain some momentum from the slowdown that has recently taken hold and is becoming more evident all the time. If that happens, it would soon translate into a new pickup in domestic freight shipments, unless the slowdown becomes more pronounced first. Transport Topics staff
FedEx Beats the Street With Earnings, Says Fuel Surcharges Offset Cost Jump
Giant small-package delivery company FedEx Corp. today said it earned 85 cents per share in its fiscal fourth quarter that ended May 31. That topped the 81-cent consensus estimate of stock analysts compiled by First Call/Thomson Financial. Earnings were up 16% from the year-ago period.FedEx Chairman Fred Smith said in announcing the earnings that the company was well-positioned for further growth. Chief Financial Officer Alan Graf said higher fuel prices cost FedEx an additional $84 million in the latest period, but that "was offset by revenue generated by fuel surcharges at FedEx Express, which increased from 3% to 4% in April."
And while many trucking companies have reported slowed freight activity in the spring, FedEx said growth in its domestic express traffic hit its highest level in more than a year in the March-May quarter. Transport Topics staff
Truck Driver Acquitted in Fatal Idaho Crash
Former PFT Roberson driver Geoffrey Lane Johnston was found innocent of misdemeanor vehicular manslaughter in the deaths of four people, including a 10-month-old boy, in an Idaho car accident.According to accident reports, Johnston's trailer went into the oncoming lanes and hit two cars in the November accident along U.S. 95. Although an Idaho State Police crash reconstruction expert calculated from skid marks that the driver had been going 74 mph when he hit the brakes, an engineer testifying for the defense said the truck had been going 53 mph. The trucker had earlier testified that his speed was between 40 mph and 50 mph. Associated Press (06/28/00)
Professional Transportation Group Announces Merger With U.S. Trucking
Marietta, Ga.-based Professional Transportation Group Ltd., Inc. and U.S. Trucking, Inc. have agreed upon a merger expected to generate more than $220 million in revenue and placing it among the top 20 truckload carriers in the nation.The board of directors for Professional Transportation announced Wednesday its approval of the deal, which includes U.S. Trucking shareholders getting common stock of Professional Trucking at a yet unknown ratio. Pending regulatory, lender and shareholder approval, the surviving corporation will be Professional Transportation. Transport Topics staff
Icahn Interest Triggers Anti-Takeover Move by CSX
Fresh from raking in a big profit from selling Nabisco shares, financier Carl Icahn has triggered a new anti-takeover action by eastern-US rail giant CSX Crop., after Icahn signaled he plans to take a 15% stake in CSX. That, of course, would make him an instant player in the intermodal industry that affects so many trucking operations.Icahn has been in transportation before, with Trans World Airlines, but his wide-ranging Wall Street plays have included Marvel Comics as well as his 10% stake in Nabisco that will turn a $600-million profit, Reuters newswire noted. Bloomberg's report on Icahn's latest moves notes that earlier this month he raised his stake in auto-parts maker Federal Mogul, and that while he has not been in railroads before, CSX share price has fallen 53% in the last 12 months. Both CSX and eastern rival Norfolk Southern suffered lots of congestion after splitting up Conrail last June.
CSX reacted to Icahn's interest by lowering the threshold for triggering a shareholder rights plan that dilutes the power of a potential acquirer's stock buys, by allowing other shareholders to get extra preferred stock for each common share they hold. That threshold had been 20% of outstanding common shares, but CSX is dropping the defense ratio to 10%. Transport Topics staff
Parts Supplier Tenneco Warns About Earnings
Auto parts supplier Tenneco said late Tuesday that it expects its second-quarter earnings to be below what Wall Street had been expecting. Slower demand both in North America and Europe were cited among the causes of this earnings warning, the latest in a recent series involving truck companies or parts suppliers.The Lake Forest, Ill.-based Tenneco said aftermarket sales were softer than expected in North America and Europe, and its worldwide aftermarket sales should be about 6% below the year-ago quarter. It also said it is experiencing "margin pressure in the North American original equipment business."
Other negatives for earnings include higher interest rates, higher steel costs in Europe and a weak euro currency. But positives include a return in June to a more normal seasonal sales trend, and a strengthening position in its operating cash flow.
Mark Frissora, Tenneco Automotive chief executive, said the company plans to "continue this success by aggressively focusing on reducing capital spending, working capital and overhead costs to reduce our debt level as quickly as possible." Tenneco will report earnings July 27, and expects to earn 37-42 cents a share. Transport Topics staff
Compiled by Transport Topics staff and INFORMATION, INC. © 2000
