S&P downgrades Con-Way debt, shares hit 52-week low

Shares of Con-Way hit a 52-week low of $20.03 Friday, but in afternoon trading they were up 40 cents, or 1.9 percent, at $21.10. They have ranged up to $55 in the past year.

The Associated Press

12/15/2008

NEW YORK — Standard & Poor’s Ratings Services lowered Con-Way Inc.’s debt one notch to “BBB-” because of concern over the trucking company’s prospects in a deepening recession.

Shares of Con-Way hit a 52-week low of $20.03 Friday, but in afternoon trading they were up 40 cents, or 1.9 percent, at $21.10. They have ranged up to $55 in the past year.

The S&P downgrade came four days after Con-Way reduced its forecast for 2008 profit by about 15 percent and disclosed that it had cut 1,450 jobs, or 8 percent of its work force.

Trucking companies are feeling the pinch as consumers cut back spending, causing retailers to reduce or curtail orders. Analysts say trucking demand has been slowing since summer, failing even to achieve its usual increase heading into the holidays.

Con-Way is a major player in the less-than-truckoad sector, in which companies combine shipments from several customers in one trailer, which has been especially hard hit in the recent slowdown.

S&P analyst Anita Ogbara said that despite Con-Way’s moves, the decline in tons shipped has worsened since the company reported weaker-than-expected third-quarter earnings.

Ogbara said the slowing U.S. economy, tight credit markets and weakness in manufacturing would lead to lower earnings and cash flow at San Mateo, Calif.-based Con-Way next year.

But Ogbara said the company has healthy liquidity, with a debt-to-capital of 57 percent on Sept. 30 and “modest” upcoming debt maturities.

In connection with the downgrade, S&P took Con-Way off credit watch and gave the outlook as “stable.”

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.