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The railroad operator said in January it would
need 3,000 fewer workers in 2020 as it aimed to streamline
operations. In May, hurt by volume declines as businesses
remained closed due to the pandemic, it announced large-scale
layoffs.
But as businesses reopen slowly, freight activity is expected to
rise and lead to a sales recovery for railroad operators in the
United States.
Union Pacific, North America's largest public railroad operator,
said in April it expected second-quarter carload volumes to fall
about 25% due to lower demand for freight load as a result of
the health crisis.
It hauls coal, industrial products, agriculture goods, chemicals
and automotive goods across the western U.S. from the Pacific to
the Mississippi.
Volumes, as measured by total revenue carloads, dropped 20% from
a year earlier, driven by declines in automotive and energy
shipments. The railroad company warned it expects 2020 carload
volumes to be down around 10% from a year earlier.
Freight revenue fell 24% to $3.97 billion in the second quarter.
The company had also warned in April that it did not expect
operating ratio — a key measure of profitability in the railroad
sector — to improve in the second quarter. A lower ratio means
higher profitability for railroads.
The Omaha, Nebraska-based railroad operator's net income fell to
$1.13 billion, or $1.67 per share, in the second quarter ended
June 30, from $1.57 billion, or $2.22 per share, a year earlier.
Analysts on average had expected earnings of $1.55 per share,
according to IBES data from Refinitiv.
Total operating revenue fell to $4.2 billion from $5.6 billion.
(Reporting by Rachit Vats in Bengaluru; Editing by Shinjini
Ganguli)
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