OMAHA, Neb. (AP) — Union Pacific’s second-quarter profit fell 28% from a year ago as carload revenue tumbled in the coronavirus pandemic.
The railroad expects improvement in the second half with full-year carload volumes to be down around 10% compared with 2019.
The company made $1.13 billion from April through June, or $1.67 per share, beating Wall Street estimates. Analysts polled by FactSet expected earnings of $1.56 per share. Revenue of $4.24 billion was down 24% for the period, slightly below Wall Street projections.
In the second quarter big freight users such as automakers were forced to close their factories for weeks in an effort to slow the spread of the virus.
As a result, Union Pacific’s freight revenue fell as pricing gains were offset by lower volumes and decreased revenue from fuel surcharges, the company said in a prepared statement.
“Our ability to be nimble and flexible in adjusting our resources to rapidly changing volumes, while providing a high-level service product demonstrates the strength of our service model,” CEO Lance Fritz said.
Shares of the Omaha, Nebraska, company slipped about 1% before the opening bell.
Carload revenue tumbled 20%, led by a steep drop-off in the auto sector.
Carload revenue in the automotive sector fell 64% for the quarter, and coal fell 24%. Revenue carloads for industrial chemicals and plastics was down 10% while metals and minerals were off 19%.
But company executives said on a conference call that freight volume has been increasing over the last month or so, and the railroad is recalling employees.
Union Pacific operates 32,400 miles of track in 23 Western states.