Vitran (VTNC) slashed 2006 earnings guidance, citing rising costs and recent economic softness.
The Toronto-based transportation and logistics company said it now expects to make around $1.50 a share, down from its previous $1.68 target. Vitran said it was hit by higher than anticipated healthcare and workers' compensation costs in the second half of the year, as well as the impact of the recently softening economy on Vitran's U.S. less-than-truckload and truckload segments.
"Although key LTL metrics such as segment revenue, weight, shipment count and revenue per hundredweight are all showing positive year-over-year and quarter-over-quarter comparisons, our legacy U.S. central states territory is not performing to plan and we no longer anticipate being able to achieve the expected net income and earnings targets we established earlier this year," the company said. "Health care costs are estimated at $1.5 million above 2005 levels, and workers' compensation expenses are anticipated to be approximately $1.0 million higher than the prior year - $0.8 million of which will be in the back half of the year.
"We are committed to improving upon these lower-than-anticipated operating results for the second half of the year. Our long-term strategic plan of exploring additional accretive acquisitions that will further extend Vitran's geographic footprint across North America remains in place. We also continue to be pleased with operating results of our recent purchases Chris Truck Line and Sierra West Express - both of which are performing at anticipated levels."