(Reuters) - Union Pacific Corp, one of the largest U.S. freight railroad operators, on Thursday reported better-than-expected quarterly profit, bolstered by higher shipping volumes of grain, refrigerated food and drinks, and retail goods.
Still, shares in the company fell 4.3% to $208.85 in midday trading on concern that the pace of volume growth and efficiency gains could moderate as a slow vaccine rollout threatens an economy battered by the COVID-19 pandemic.
“All of that all raises some questions,” Edward Jones analyst Jeff Windau said.
Union Pacific, which ferries goods in and out of busy seaports in states like California and Texas, expects 2021 volume growth of 4-6%. Executives warned that the forecast depends on a successful COVID-19 vaccine roll out and other factors.
Analysts expect the recovery in U.S. railroad volumes to continue in 2021, with a pick-up in demand giving way to broader-based gains in rail traffic, spurred by wood products for home construction, grains for biofuels and export to China, and goods sold via e-commerce.
Chief Executive Lance Fritz said Union Pacific will adapt to whatever 2021 brings.
“We’re going to go wherever the year goes and get as much as we can out of it,” said Fritz, who like other CEOs is lobbying to have vaccines prioritized for his company’s essential workers.
During the fourth quarter, volume measured by total revenue carloads rose 3%, despite ongoing weakness in coal and other energy shipments.
Net income slipped 2% to $1.38 billion, or $2.05 per share, in the quarter ended Dec. 31.
Excluding a $278 million pre-tax, non-cash impairment charge, the company earned $2.36 per share, 6 cents per share better than analysts’ average estimate, according to Refinitiv data.
Total operating revenue fell 1% to $5.14 billion.
Reporting by Sanjana Shivdas in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Maju Samuel and Nick Zieminski
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