YRC Worldwide Inc (YRCW) To Gain from Improving Operating Efficiency


YRC Worldwide Inc (NASDAQ:YRCW) has been incurring losses in all four quarters of the year 2014. The first quarter of the year 2015 will likely be no different. However, the key factors will be operational efficiency, as well as improving base rates. Though the market continues to remain challenged, due to the weak oil price, these two key factors will play an important role in deciding the extent of loss in the first quarter. The foreign exchange will also have its impact in the final results.

What To Expect

It was a mixed bag through the year for YRC Worldwide Inc (NASDAQ:YRCW) in 2014. In the first two quarters, its bottom line failed to meet the Street expectations, whereas in the third and fourth quarters, it delivered better than estimated results. The key factors were the operating efficiency and enhanced base rate. Now the question is whether it will have extended it to the March quarter too.

The volatility in oil prices has obviously impacted the Street analysts’ predictions. For instance, analysts predicted a loss of 50 cents a share three months ago. It was narrowed to 42 cents of loss per share two months ago. However, the loss expectation was widened to 43 cents a share one month back and 49 cents a share one week ago.

YRC Worldwide Inc (NASDAQ:YRCW) is expected to deliver revenue of $1.22 billion for the first quarter. In the year-ago quarter, the company suffered a net loss of $3.95 a share and generated $1.21 billion revenue. This means that analysts are expecting operational efficiency to cut down the losses, while estimating 80 basis points improvement in the top line for the March quarter.

Key Focus

The company was expected to extend the yield growth it witnessed during the fourth quarter from its freight division. The company was able to achieve 5.7% year-over-year yield and excluding fuel surcharges, this was 7.3%. It was also able to achieve growth in total revenue per hundredweight.

The optimism of yield improvement gains ground since the last two quarters offered much relief to YRC Worldwide Inc (NASDAQ:YRCW). In fact, it was begun in the September quarter.

Headwinds

During the fourth quarter results announcement, the company predicted that the weak diesel price and the resultant lower fuel surcharge revenue would be a headwind for the complete LTL industry.

YRC Worldwide Inc (NASDAQ:YRCW) had already indicated that it will continue building up base rates and get paid for the service it is offering. At the same time, the company will realize the gains of its investment made in driver recruitment, employee engagement, technology, and safety.

Foreign currency

The company’s results will also provide the impact of foreign currency in the first quarter. YRC Worldwide Inc (NASDAQ:YRCW) will report its March quarter results on April 30 before the bell.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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