The slowing economy and ongoing trade disputes are dragging railroad profits down in the second half of the year.
Union Pacific and CSX railroads both reported declining profit and revenue as they hauled less grain, imported goods and other products. Union Pacific said volume fell 8% in the quarter.
Union Pacific earned $1.56 billion net income, or $2.22 per share, or 7 cents short of what industry analysts had expected, according to a survey by Investment Research. Profit fell 2% compared with the same period last year.
The earnings report Thursday from Union Pacific Corp., based in Oklahoma, Nebraska, comes a day after the Florida railroad CSX reported falling profits and revenue as signs of a slowing global economy grow.
Over the past three months, Union Pacific’s agricultural shipments fell 2% as the ongoing trade dispute with China continues to crimp exports. Shipments of containers of goods fell 11 percent as the economy slowed.
Union Pacific said it expects similar volume declines in the final quarter of the year
Revenue fell 7% to $5.52 billion, also short of the $5.62 billion analysts expected.
Union Pacific controlled costs well, said Citi analyst Christian Wetherbee, but not enough to offset deteriorating freight volumes.
The railroad cut its expenses by 10% to $3.28 billion in the quarter. Union Pacific has been working to streamline its operations by running trains on a tighter schedule, so it can use fewer locomotives, cars and employees to move the same freight.
The company operates 32,400 miles of track in 23 Western states.
Shares of Union Pacific slipped 2% in early trading.
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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNP at https://www.zacks.com/ap/UNP