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Kansas City Southern CEO sees ‘modestly robust’ financial restoration persevering with this yr

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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 Street estimates of $663 million. However, Kansas City Southern’s per-share earnings of $1.96, excluding gadgets, was higher than the earnings 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 mentioned on “Closing Bell.”

Kansas City Southern additionally raised its full-year steering Friday, saying it expects earnings per share to be barely increased on a year-over-year foundation. Shares of the corporate closed down 2.72% Friday to $179 apiece. The inventory is up almost 17% this yr.

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

A Kansas City Southern (KSC) Railway locomotive passes by 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 totally 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 comparable to housing have seen spectacular power. However, there are questions now in regards to the resilience of the restoration, particularly as Congress has been unable to return to phrases on one other spherical of stimulus.

Ottensmeyer mentioned Kansas City Southern’s strongest phase has been refined petroleum merchandise, largely pushed by shifting gasoline from Gulf Coast refineries into Mexico. The firm additionally has skilled power in its automotive phase, he mentioned, because the auto business rebounded from the coronavirus slowdown.

On the opposite hand, Ottensmeyer mentioned Kansas City Southern has seen weak spot in its intermodal volumes, which contain a number of modes of transportation. He mentioned 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 basic, Kansas City Southern has seen an “incredible” V-shaped restoration on its delivery volumes from pandemic lows, in line with Ottensmeyer. He mentioned the previous couple of 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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