(Reuters) - U.S. railroad operator Union Pacific Corp (UNP.N) topped Wall Street estimates for quarterly profit on Thursday, but withdrew its full-year operating ratio and volume forecasts as business shutdowns triggered by the coronavirus crisis weigh on the U.S. economy.
Ratings agency Moody’s has said railroads in North America will face lower demand for freight services in the event of an extended or more widespread outbreak of the coronavirus which has been disrupting supply chains and slowing economic activity.
The company said it would reduce capital spending in 2020 by $150 million to $200 million and forecast a drop of about 25% in second-quarter volumes.
The railroad also warned that improvement in its operating ratio for the second quarter was unlikely.
The company had previously expected an operating ratio of about 59% for the full year and had forecast volumes turning slightly positive in 2020.
However, shares of Union Pacific were up 3% before the bell as the railroad remained confident it had ample liquidity to sustain an extended period of lower volumes, and boasted of a strong balance sheet amid the uncertainty.
Volumes dropped 7% in the quarter, driven by declines in coal and intermodal shipments. Freight revenue fell 3% to $4.88 billion.
Union Pacific’s net income rose to $1.47 billion, or $2.15 per share, in the first-quarter ended March 31, from $1.39 billion, or $1.93 per share, a year earlier.
Analysts, on average, expected earnings of $1.90 per share, according to IBES data from Refinitiv.
Total operating revenue fell 3% to $5.23 billion.
Reporting by Sanjana Shivdas in Bengaluru; Editing by Shailesh Kuber