Waste Management's profit rises 12 percent
Waste Management Inc., North America's largest trash hauler, said third-quarter profit rose 12 percent because of higher prices.
Net income increased to $310 million, or 63 cents a share, from $278 million, or 54 cents, a year earlier, Houston-based Waste Management said today in a statement. Sales climbed 3.6 percent to $3.53 billion.
Chief Executive Officer David Steiner has been cutting less- profitable routes and adding fuel surcharges to shield profits from higher energy costs and a slowdown in residential construction that has cut trash-hauling volume. The company earlier this month abandoned its bid to buy Republic Services Inc. to avoid financial risk as credit markets tighten.
``Pricing remained healthy in the quarter,'' JPMorgan Securities Inc. analyst Scott Levine said in an Oct. 20 research note. ``Waste Management's national footprint should limit any further deterioration'' in the volume of waste handled.
Waste Management said profit excluding asset sales and costs resulting from labor action was 63 cents a share, topping the 61- cent average estimate of eight analysts surveyed by Bloomberg.
Waste Management rose 77 cents, or 2.7 percent, to $29.60 yesterday in New York Stock Exchange composite trading. The shares have fallen 9.4 percent this year.
Price Increases
Higher prices increased income from operations to 17.9 percent of total revenue from 16.6 percent a year earlier, the company said in the statement.
Waste Management controls about 25 percent of North America's trash-disposal industry, Allied Waste Industries Inc. has 11 percent and Republic Services Inc. has 6 percent, according to Standard & Poor's equity analyst Stewart Scharf.
Phoenix-based Allied, and Fort Lauderdale, Florida-based Republic, plan to merge in a transaction valued at about $3.97 billion at yesterday's closing price. The two companies estimate the combination would save $150 million annually in duplicate costs.
The merger is expected to be completed in mid-December, Allied Waste said yesterday.