Ryder May Sell Original Unit, Renting Trucks to Consumers
March 31, 2011
MIAMI -- Ryder System Inc. said it is in talks to sell its most widely recognized operation, its consumer truck rental business, to lessen its exposure to business-cycle sensitivity and focus its business on corporate customers. Ryder said it is in ``serious'' discussions with potential buyers for the rental business, but it did not name them. The Miami provider of transportation services hired investment banker Goldman, Sachs & Co. to help sell the unit, which accounted for about $500 million, or about 10%, of Ryder's 2010 revenue of $5.2 billion. The decision to sell the unit is in line with Ryder's strategy to focus the majority of its resources on the businesses in which it has long-term contractual agreements with customers, such as integrated logistics on a global basis, full-service truck leasing and public transportation services. Friday's announcement confirmed rumors that have surfaced periodically over the past two years about the possible sale of the consumer truck rental business, a profit laggard. In March, a Gruntal & Co. analyst upgraded Ryder stock to ``outperform'' from ``neutral,'' saying the company might seek to lessen its exposure to business-cycle sensitivity by selling its seasonal consumer truck rental business. In April, Ryder reported a 46% drop in first-quarter earnings from a year earlier due to the strike at General Motors Corp. and bad weather. GM's Saturn division is one of Ryder's biggest customers. At the time, Dobbins said that because of its weak margins, it was taking ``bolder action'' to cut costs, which could include cuts in its work force. Founded in the 1950s to rent trucks, Ryder has moved into managing supply and delivery chains for big customers.
