TransForce making money. Just not as much, company says

MONTREAL — Our rising buck and falling manufacturing output resulted in Canada’s biggest trucking company reporting lower than expected third-quarter earnings this week. But it still made money.

TransForce Income Fund, whose familiar swoosh adorns more than 5,000 power units, announced to unit-holders that a slowdown in volumes meant distributable cash was $54.6 million, down from $60.4 million one year earlier.

Revenue, however, went up eight percent from $448.7 million to $486 million.

TransForce Chairman Alain Bedard told unit-holders that the company was able to expand over the past year, despite the economic difficulties facing the entire industry.

According to market analysts that cover TransForce and other income trusts, even though TransForce is significantly exposed to eastern Canada and cross-border traffic volumes, it has been able to protect margins to some degree through cost efficiency initiatives such as scaling down capacity and re-allocating drivers to more profitable segments.

And, Bedard also mentioned, Western Canada played a particularly important role in buoying the company’s fortunes even though Alberta’s new royalties could put a drag on future growth.

“Our operations,” he said, “continue to adjust to a weak market. Parcel delivery has grown significantly while our Less Than Truckload segment has experienced lower volumes. In central Canada, the strength of the Canadian dollar has resulted in a continuing slowdown in the manufacturing and automotive sectors.

“This has lowered LTL and TL volumes while creating pricing pressures across the industry,” Bedard said. “In Western Canada, the oilfield services division is being affected by the decline in drilling activity that has worsened since the Alberta government’s announcement of possible changes to oil and gas royalties. The new royalty policy is to be announced shortly and, depending on its effect on the energy industry, we will take the appropriate action possibly including layoffs as others serving the drilling segment have done.”