The railroad expects improvement from the second half of full-year carload volumes to be down approximately 10% in comparison with 2019, assuming there is not a second tide of virus-related financial shutdowns.
For into a 10 percent full-year decrease, the business said it anticipates cargo volumes to be down 6% to 8 percent in the second half as companies continue to recuperate. “We are growing our confidence here in the long run,” CEO Lance Fritz explained.
Analysts polled by FactSet estimated earnings of $1.56 per share.
In the next quarter, large freight users for example automakers have been forced to close their factories for months in a bid to impede the spread of this virus.
Consequently, Union Pacific’s cargo earnings dropped as pricing profits were offset by reduced volumes and diminished revenue from fuel surcharges, the business said Wednesday in a prepared statement.
“We have never experienced this type of steep and profound decline within our carloads,” Fritz said in a meeting. “We have grown out fairly steadily as, call it early May, which is truly encouraging.”
The number of railroad cars producing earnings tumbled 20 percent for the quarter, led by a 64 percent drop-off from the automobile industry. Coal fell 24%, although industrial compounds and plastics were down 10 percent. Metals and minerals had been away 19%. Empty cars hauled by the railroad do not generate revenue.
Business executives said cargo volume is regaining enough to allow them to begin recalling furloughed workers. However, Fritz reported that because of productivity benefits like running fewer longer trains, Union Pacific will not need as many employees as it did until the pandemic started.
The railroad track is getting more technology work done by fewer people, it is utilizing fewer locomotives, and fewer cars are required since they are traveling more miles every day, ” he explained. The amount of trains has diminished, ” he said.
“You put that all together, there is no doubt that when we recuperate fully and begin growing from this past year, it is going to be accomplished with fewer people than we had last year,” he explained.
The railroad has cut roughly 22 percent of its workforce in the last year and today has approximately 30,000 full-time employees, which Fritz stated will nevertheless grow as cargo volumes grow.
The railroad customers see irregular, slow recoveries, but no substantial shutdown such as the nation went through in March and April, Fritz said. “Given the fact that there’s some pent-up requirement and there’s a few restocking that has to happen, it seems to us for certain things are getting better,” he explained.
Shares from the railroad track, which functions 32,400 kilometers (52,143 km ) of track in 23 Western nations, fell 2.6percent to $174.71 in late-day trading.
This story was adjusted to show that the company forecasts freight volumes to decrease 6% to 8 percent in the second half, not 9% to 10 percent as the CEO said on a conference call.