J.B. Hunt shares tank as higher trucking costs prompt CFO's warning on possible profit drop
JBHT•Other trucking shares also weaken
Shares of other trucking companies fell between 0.6% and 3%, with Expeditors International of Washington EXPD.N down the least and Knight-Swift KNX.N down the most.
Cost pressures and rate lag weigh on margins
- J.B. Hunt gets about 50% of its quarterly revenue from the intermodal segment, where goods are shipped through two or more modes of transport.
- However, a two-quarter lag in intermodal prices catching up with costs left the company struggling to keep up with higher expenses in its trucking business.
- Baird analysts said the warning shows the company was "slower than they should have been" to raise rates, while being "overly reliant" on reducing operating costs.
- The company forecast about $25 million in additional driver-hiring costs in the third quarter, compared with the second quarter, while fuel costs are expected to rise by at least $10 million.
- Transport firms this year have battled rising fuel rates, driven by the Iran war, by passing them on as surcharges to customers.
- The industry has also faced an acute shortage of skilled drivers after Washington's move to bar non-citizens from applying for commercial driver licenses.
Shares fall after CFO warns of lower third-quarter profit
Shares of J.B. Hunt Transport Services JBHT.O dropped 11% on Wednesday after the trucking firm's finance chief warned of a sequential drop of 5% to 10% in third-quarter profit.
