Freight Division Contribution Will Be Key For YRC Worldwide Inc (YRCW) Earnings

YRC Worldwide Inc (NASDAQ:YRCW) has the habit of extremes in it’s earnings performance. This is based on the last four quarter performance where it exceeded estimates in two quarters and way behind in the other two quarters. The company seems to be confused whether to focus on market share or the better yield.

Preferred Profit Growth

During the first quarter results announcement, YRC Worldwide Inc (NASDAQ:YRCW) indicated that it preferred yields and profit growth than the volume growth or the market share. As a result, it suffered volume shrinkage in the first quarter. However, the pricing grew on a day-today basis from the preceding quarter in its regional transportation division. Yet, its revenue dipped in the first quarter due to fuel surcharge revenue to reflect the lower volume.

The shift in focus had its impact. For instance, the company’s tonnage per day in its Freight division slipped 4.1% while revenue per hundredweight advanced 2.6% that included fuel surcharge. Excluding fuel surcharge, revenue per hundredweight was 8.2% and revenue per shipment advanced 9.6% in the first quarter. YRC Worldwide Inc (NASDAQ:YRCW) had no option but to continue the focus on yield in the second quarter too. That means it would have faced volume shrinkage in the three month period between April and June.

Revenue Generation

The company has two segments, YRC Freight and Regional Transportation. Its Freight segment contribution was 62.2% in the first quarter leaving the remaining 32.8% contribution from the other division. Freight division witnessed 33 basis points dip in contribution while the other segment gained the same basis points in the first quarter. It is quite unlikely that the revenue pattern would have changed in the second quarter.

Analysts expect YRC Worldwide Inc (NASDAQ:YRCW) to earn 17 cents a share and $1.31 billion revenue for the second quarter. They have reduced their estimations from 22 cents a share one month ago. The company is reporting its numbers on July 30.

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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