(Adds CEO comment, details of workforce reductions)
Oct 17 (Reuters) - Railroad operator Union Pacific Corp on Thursday reported quarterly profit that missed analysts’ estimates and said it would cut capital spending and jobs as the multi-front U.S. trade war worsens an industry-wide freight volume slump.
The plans to trim costs, along with efficiency and profitability gains, helped send shares up 1% to $165 in afternoon trading.
The Omaha, Nebraska-based railroad forecast an 8% drop in fourth-quarter volume. That would be a repeat of the third quarter, when coal and trade-sensitive international shipments contributed to declines.
Railroads have lost some business to competitively priced long-haul truckers as they grapple with evaporating coal demand, softness in the domestic auto and industrial sectors and U.S. trade policies that have hampered shipments of everything from soybeans to shoes.
The railroad was seeing “a little sequential bump” as retailers stocked up for the holiday season, Chief Executive Lance Fritz said.
Still, that doesn’t make much of a difference at Union Pacific because international volumes are lagging last year’s levels, which surged as retailers rushed in China-made goods to avoid pending tariffs, Fritz said.
Citing the weak environment, Union Pacific is cutting its annual capital spending budget to $3.1 billion from $3.2 billion, executives said on a conference call with analysts.
The railroad is also shrinking its workforce, in part due to efficiencies such as running fewer locomotives.
Union Pacific had 13% fewer employees in the third quarter versus a year earlier. That number will move to 15% in the fourth quarter.
Third-quarter net income fell to $1.56 billion from $1.59 billion a year earlier.
Earnings per share were $2.22 per share in the latest quarter, 8 cents short of analysts’ average estimate, according to according to IBES data from Refinitiv.
Total revenue fell to 7% $5.52 billion, below the $5.63 billion analysts expected.
Meanwhile, efficiency and profitability improved. Union Pacific’s operating ratio, a measure of operating expenses as a percentage of revenue and a key metric for Wall Street, was 59.5% versus 61.7% a year ago.
Union Pacific and Berkshire Hathaway-owned BNSF are the largest U.S. freight rail operators with annual revenue of more than $20 billion each.
CSX Corp, the third-largest U.S. railroad, reported better-than-expected profit on Wednesday.
Reporting by Dominic Roshan K.L. in Bengaluru and Lisa Baertlein in Los Angeles; Editing by Bernadette Baum