P.M. Executive Briefing - Feb. 22
This Morning's Headlines:
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Discord Emerges on OPEC Output Boost
Although Gulf Cooperation Council oil ministers will probably favor an increase in oil output at their Wednesday meeting, a Saudi official said the council members have not agreed on "how much and when"; this could push back an increase in the oil supply to September, the official said.March 2 will see a meeting between Mexico, Saudi Arabia, and Venezuela, which led last year's drive to roll back output last year and now want to increase output, and on March 27 the Organization of Petroleum Exporting Countries will meet, which could increase supply as early as April.
U.S. Energy Secretary Bill Richardson is visiting oil producers to try to get them to raise output; Kuwait and Iran remain opposed, although Kuwait might support raising output bit by bit.
Because slight changes in output often lead to great changes in price, OPEC has a hard time getting the balance right, and the Saudi official said the cartel could begin with incremental changes to keep prices from dropping a great deal. Certain data also suggests OPEC members are not abiding by the output cutbacks. Wall Street Journal (02/22/00) P. A3; Liesman, Steve
Initial Trucker Protest Has Limited Impact: Prospect of Canada-Wide Blockade Worries Shippers and Exporters
The fuel-price protest by more than 400 owner-operators on Monday at the Nova Scotia-New Brunswick border nearly brought shipments in Atlantic Canada to a standstill. Although there was substantial disruption for shippers and exporters, they fear independent truckers will begin a blockade across the entire country.An interim injunction was obtained against the protesters by the Nova Scotia government, fearing the economy would suffer greatly if truckers implement a large slowdown or job action.
Canadian trucking groups are calling on members to impose fuel surcharges, while reduced federal and provincial fuel taxes was urged by Canadian Federation of Independent Business President Catherine Swift.
Canadian Trucking Alliance CEO David Bradley said many shippers in large industries have refused to pay surcharges and public opinion could turn against the truckers if larger protests occur.
[The Calgary Herald Online said the truckers intend to disobey the injunction ordering an end to the Trans-Canada Highway partial blockade. Protests also took place Monday in the Toronto area, Quebec, and Newfoundland, the report said.] Vancouver Sun (02/22/00) P. D10; Stevenson, James
Ryder System Is Taking Slow Lane to Boost Profits
Ryder System's fourth-quarter earnings from continuing operations of $37.1 million (59 cents per share) beat a First Call analysts' consensus estimate of 52 cents and the year-earlier figure of 51 cents as one-time items drove net income down to $5.9 million (9 cents per share) from $39.4 million (55 cents per share).The one-time items, included in the analysts' projections, included a $47.4-million pretax charge for layoffs and consolidation, a loss of $4.4 million for debt prepayment penalties, a $4 million gain from reduced income taxes after it sold Public Transportation Services, and $48 million in Y2K expenses.
According to Ryder President Gregory Swienton, its earnings will pick up, with strong full-year results, after the first quarter because the $52 million restructuring is almost done.
Ryder is focusing on centralized asset management, e-commerce, and capital financing. However, some analysts have said Ryder may experience more restructuring costs and earnings delays, and Stephens Inc. and USN Piper Jaffray downgraded the company recently. But Banc of America Securities began coverage at "market perform," and Bear Sterns began coverage at "neutral."
Tony Burns, chairman and CEO, predicted first-quarter earnings similar to the 31 cents per share earned in the year-earlier quarter. South Florida Business Journal Online (02/21/00); Fakler, John T.
Teamsters Target Bed Bath & Beyond in Rift with Overnite Transportation
The Teamsters union has begun targeting retailer Bed Bath & Beyond because of a failure to convince the retailer to switch its shipments away from Overnite Transportation as the union tries to organize that carrier.Union Local 70 has been handing out fliers at stores in the San Francisco Bay area saying Bed Bath & Beyond was sued last year by eight former employees accusing the retailer of racial and sex discrimination and ineffective equal-opportunity policies.
The union intends to step up action against retailers who ship via Overnite, said Chuck Mack, western regional vice president. East Bay Business Times Online (02/21/00); Valcke, Nanci L.
Nissan Diesel Stock Dives Despite Bailout
Although Nissan Diesel Motor's stock went up 5% Feb. 7 on the Tokyo Stock Exchange as its bailout plan was announced, the share price went down 20% by Thursday to 85 yen. When stock falls past 100 yen, it is historically thought of as a vote of no confidence.ING Baring Securities (Japan) analyst Chikao Masuzawa blamed the stock decline on a lack of recovery in the Japanese truck market and on investors switching their holdings to better-performing companies. But any indication that the truckmaking industry is improving will cause Nissan Diesel shares to rebound, she said. Automotive News (02/21/00) No. 5862; P. 49; Treece, James B.
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