DOW JONES NEWSWIRES
Waste Management Inc. (WMI) posted a 31% decline in
first-quarter net income as the nation's largest garbage hauler and
landfill operator continued to suffer from high commodity costs
that hurt margins and demand.
Chief Executive David Steiner said the deteriorating recycling
commodities markets hurt first-quarter earnings by 9 cents.
Waste Management said net income slid to $170 million, or 31
cents a share, from $248 million, or 48 cents a share, a year
earlier. Excluding restructuring and other items, earnings fell to
42 cents from 47 cents.
Revenue fell 14% to $2.81 billion, partly owing to the stronger
dollar.
Analysts polled by Thomson Reuters projected earnings of 41
cents a share on revenue of $2.97 billion.
Operating margin decreased to 13.2% from 15.6% amid higher
commodity costs.
Revenue from collections, the company's largest business fell
8.7%, while the much smaller recycling business slumped 55% and
landfill revenue fell 12%.
Steiner said conditions have stabilized and prices are "trending
upward" from their January lows, but the company still expects a
negative year-over-year impact from recycling operations of 15
cents to 20 cents a share, most of which is expected in the first
half of the year.
While industry fundamentals are expected to remain strong on
lower gas prices, the waste-management sector has experienced a
sharp decline in demand, leading to reduced volumes and
recycling-commodities price declines. The industry has turned to
acquisitions to expand amid modest industry growth, but some
companies, like Waste Management, have had to cut staff and freeze
salaries to weather the recession.
Shares closed Tuesday at $26.98 and were flat in premarket
trading.
-By Katherine E. Wegert, Dow Jones Newswires; 201-938-5294;
katherine.wegert@dowjones.com