Waste Management 2Q Net Drops 22% On Volume Drop, Costs

   DOW JONES NEWSWIRES 
 

Waste Management Inc. (WMI) posted a 22% drop in second-quarter earnings as the nation's largest garbage hauler and landfill operator continued to struggle amid recycling commodities costs and falling demand for industrial services.

The company also projected full-year profit below analysts' expectations - $1.95 to $1.99 a share compared with Wall Street's average estimate of $2.02, according to Thomson Reuters. Volumes are expected to fall the rest of the year in line with the latest quarter's decline, which wasn't disclosed.

Waste Management earlier this year announced salary freezes and staff cuts in an attempt to cut more than $120 million in operating costs. Chief Executive David Steiner on Thursday said the company was on track to meet that goal.

Late Wednesday, Waste Management's rival Republic Services Inc. (RSG) reported its second-quarter earnings soared as the company recorded a big gain from the disposal of acquired assets. Republic Services is also in cost-cutting mode, and raised its earnings for the year, but said revenue would fall more than expected.

Waste Management's earnings dropped to $247 million, or 50 cents a share, from $318 million, or 64 cents a share, a year earlier. The latest results included a 2 cent charge, mostly due to restructuring costs, while the prior-year quarter had a penny gain from income tax items.

Revenue slid 15% to $2.95 billion.

Analysts polled by Thomson Reuters projected earnings of 54 cents a share on revenue of $3.02 billion.

Operating margins were flat at 18.1%.

Revenue from collections, the company's largest business, rose 3%. But Steiner said recycling commodity prices increased each month in the second quarter, and by June, had increased over 41% from January lows.

Shares closed at $29.48 on Wednesday and were inactive in premarket trading.

--By Melissa Korn and John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]