DOW JONES NEWSWIRES

Allied Waste Industries Inc.'s (AW) second-quarter net income climbed 22% on higher revenue from a price hike despite lower volume because of the slower economy.

"We continue to perform well against our long-term strategies that drive profitable growth, margin expansion, strategic pricing and greater financial returns, while successfully adjusting our day-to-day operations to the economic conditions which have remained very challenging," said Chief Executive John Zillmer.

The garbage hauler and recycler reported net income of $111.4 million, or 25 cents a share, up from $91.2 million, or 21 cents a share, a year earlier.

The latest results included 2 cents a share in merger-related costs. Excluding items, earnings rose to 27 cents a share from 21 cents.

Revenue rose 2.2% to $1.58 billion on an average price increase of 6.9%, including a fuel-recovery fee. The price hike was partially offset by a 4.8% decline in volume because of the slower economy.

Analysts' mean estimates were for per-share earnings of 24 cents on revenue of $1.6 billion, according to a poll by Thomson Reuters.

Gross margin rose to 38.6% from 37.7%.

Residential collection revenue grew 2.2% while commercial collection revenue rose 8.5%. Recycling revenue climbed 12%.

Allied plans to merge with Republic Services Inc. (RSG) in a stock deal valued at $6.24 billion. The second- and third-largest U.S. garbage haulers, respectively, say the combination would let them compete better with industry giant Waste Management Inc. (WMI). However, Waste Management is seeking antitrust approval that would allow it to buy a stake of greater than 1% in Republic, which it has proposed buying for $6.3 billion. Republic rejected that offer and this week adopted a poison pill to thwart Waste Management's efforts.

Revenue growth in the industry has been modest, and companies have turned to acquisitions to expand and create efficiencies. The sector has gone through several waves of consolidation as larger companies buy up regional operators. But the acquirers often have had difficulty integrating and managing their operations.

Looking ahead, Allied expects 2008 operating income, excluding merger-related costs and impairments, will be at the high end of a range of $1.15 billion to $ 1.19 billion. Analysts' mean estimate was for $1.16 billion.

Allied's shares were at $11.74, up 0.9%, in after-hours trading.

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com

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  (END) Dow Jones Newswires
  07-30-08 1642ET
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