Ryder System Inc. profits plummeted 37% in the fourth quarter due to lower used truck sales and higher depreciation costs from lower used truck prices, ending the period significant worse than industry analysts had predicted.
The Miami-based company collected $48.2 million in earnings for the three-month period, or 92 cents per share, while the Bloomberg News consensus forecast, based on a survey of industry analysts, was for $76.3 million, or $1.36. Ryder made $75.9 million, or $1.42, during the fourth quarter in 2015.
“We now anticipate that the used vehicle downturn will continue through mid-2018. While future pricing will be determined by the market, our forecast assumes average used vehicle pricing will decline by double digits year-over-year,” said CEO Robert Sanchez, who added that 2017 earnings would improve due to layoffs and other cost-savings actions.
Revenue improved 3.4% during the quarter to $1.7 billion, but the company lost $32 million on the used truck market versus a $17.7 million gain in 2015. The fleet management solutions unit, which leases, maintains, rents and sales used trucks, generated $1.2 billion in revenue, including fuel surcharges, virtually unchanged year-over-year. Dedicated transportation services, which handles transportation management logistics, earned $256.9 million in revenue, up 11% year-over-year. The supply chain solutions division, which offers supply chain consulting and other third-party logistics services, increased revenue 10% to $430.2 million.
Nevertheless, operating income, or the amount after expenses were deducted from revenues, plunged 48% to $64.4 million at the fleet management solutions division. Dedicated transportation services operating income rose 38% to $15.3 million and supply chain solutions improved 11% to $26.4 million.
This year doesn’t look much brighter for the company because it has already lowered forecasts to $4.78 to $5.08 per share, significantly lower than the $5.44 from industry analysts. For 2016, the figure was $4.94.
Ryder ranks No. 6 on the Transport Topics Top 50 list of the largest logistics companies in North America and No. 13 on the Top 100 list of the largest U.S. and Canadian for-hire carriers.