The CEO of Kansas City Southern informed CNBC on Friday he sees the corporate’s restoration from coronavirus enterprise lows persevering with for the remainder of 2020, an optimistic signal for the broader U.S. economic system.
The railroad operator reported third-quarter earnings earlier within the day, posting revenues of $660 million that missed Wall Avenue estimates of $663 million. Nevertheless, Kansas Metropolis Southern’s per-share earnings of $1.96, excluding objects, was higher than the earnings per share of $1.90 analysts had forecast.
“Throughout our industrial and client economic system, we predict it is going to proceed to be modestly sturdy from this level by way of the top of the yr,” CEO Patrick Ottensmeyer mentioned on “Closing Bell.”
Kansas Metropolis Southern additionally raised its full-year steering Friday, saying it expects earnings per share to be barely larger on a year-over-year foundation. Shares of the corporate closed down 2.72% Friday to $179 apiece. The inventory is up practically 17% this yr.
Carload volumes have been down 4% within the third quarter in contrast with the year-ago interval. However that’s bettering, Ottensmeyer mentioned. “We’re up just a little bit from final yr and definitely above pre-Covid ranges,” he mentioned.
A Kansas Metropolis Southern (KSC) Railway locomotive passes by way of Knoche Yard in Kansas Metropolis, Missouri, on Tuesday, Jan. 7, 2020.
Whitney Curtis | Bloomberg | Getty Pictures
Railroad operators, with their publicity to a number of completely different industries, are sometimes seen as bellwethers for the economic system. The U.S. has added tens of millions of jobs again in latest months after steep employment cuts from the pandemic, and sectors similar to housing have seen impressive strength. Nevertheless, there are questions now concerning the resilience of the recovery, particularly as Congress has been unable to return to phrases on one other spherical of stimulus.
Ottensmeyer mentioned Kansas Metropolis Southern’s strongest phase has been refined petroleum merchandise, largely pushed by shifting gasoline from Gulf Coast refineries into Mexico. The corporate additionally has skilled power in its automotive phase, he mentioned, because the auto industry rebounded from the coronavirus slowdown.
However, Ottensmeyer mentioned Kansas Metropolis Southern has seen weak point in its intermodal volumes, which contain a number of modes of transportation. He mentioned they’re lagging the trade there and “that has to do with some service interruptions, some points occurring in Mexico that we’re attempting to take care of which have brought about us to lose some enterprise, not less than for some time period.”
Typically, Kansas Metropolis Southern has seen an “unbelievable” V-shaped restoration on its transport volumes from pandemic lows, in line with Ottensmeyer. He mentioned the previous few months have been like a curler coaster “if you concentrate on the issues we wanted to do, not understanding what was forward, with volumes falling that rapidly and that dramatically within the second quarter, after which bouncing again 90 days later.”
