J.B. Hunt Warns of Dropping Profits

J.B. Hunt Transport Services Inc. of Lowell issued a strongly worded profit warning Sept. 18, announcing its net profit for the third quarter would be far below analysts’ estimates.

Hunt, which has seen its stock plummet in the last month from $25 per share Aug. 27 to $12.49 Sept. 26, issued a release saying its net profit for the third quarter would be about 5 cents per share. Analysts’ estimates averaged about 26 cents per share.

Hunt cited the “precarious financial condition of the industry,” such as weakened demand, high fuel prices, soaring insurance rates, fleet replacement costs and the startup expenses for new operations.

Hunt is the nation’s largest publicly traded truckload carrier.

“Cost pressures have been intense in the transportation industry over the last several months,” the company statement read. “Used truck prices have cratered with no apparent recovery in sight causing the ownership cost of equipment to increase substantially … costs associated with greater than normal activity in replacing both tractors, trailers and containers are being incurred.”

The company’s Dedicated Contract Services segment, on which Hunt is counting to produce stable, predictable freight contracts, is growing rapidly, but the attendant costs “will negatively impact earnings for the third quarter,” the company stated. The costs are recoverable over the term of the contracts but are “incurred currently.”