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Kansas City Southern CEO sees ‘modestly robust’ economic recovery continuing this year


The CEO of Kansas City Southern instructed CNBC on Friday he sees the corporate’s recovery from coronavirus enterprise lows continuing for the remainder of 2020, an optimistic signal for the broader U.S. financial system.

The railroad operator reported third-quarter earnings earlier within the day, posting revenues of $660 million that missed Wall Street estimates of $663 million. However, Kansas City Southern’s per-share earnings of $1.96, excluding objects, was higher than the income per share of $1.90 analysts had forecast.

“Across our industrial and consumer economy, we think it’s going to continue to be modestly strong from this point through the end of the year,” CEO Patrick Ottensmeyer stated on “Closing Bell.”

Kansas City 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 year.

Carload volumes had been down 4% within the third quarter in contrast with the year-ago interval. But that’s enhancing, Ottensmeyer stated. “We’re up a little bit from last year and certainly above pre-Covid levels,” he stated.

A Kansas City Southern (KSC) Railway locomotive passes by way of Knoche Yard in Kansas City, Missouri, on Tuesday, Jan. 7, 2020.

Whitney Curtis | Bloomberg | Getty Images

Railroad operators, with their publicity to a number of completely different industries, are sometimes seen as bellwethers for the financial system. The U.S. has added tens of millions of jobs again in current months after steep employment cuts from the pandemic, and sectors resembling housing have seen spectacular power. However, 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 stated Kansas City Southern’s strongest section has been refined petroleum merchandise, largely pushed by transferring gasoline from Gulf Coast refineries into Mexico. The firm additionally has skilled power in its automotive section, he stated, because the auto business rebounded from the coronavirus slowdown.

On the opposite hand, Ottensmeyer stated Kansas City Southern has seen weak point in its intermodal volumes, which contain a number of modes of transportation. He stated they’re lagging the business there and “that has to do with some service interruptions, some issues going on in Mexico that we’re trying to deal with that have caused us to lose some business, at least for some period of time.”

In normal, Kansas City Southern has seen an “incredible” V-shaped recovery on its transport volumes from pandemic lows, based on Ottensmeyer. He stated the previous few months have been like a curler coaster “if you think about the things we needed to do, not knowing what was ahead, with volumes falling that quickly and that dramatically in the second quarter, and then bouncing back 90 days later.”



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