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Southern CEO of Kansas City for economic recovery from coronavirus

Kansas CEO City Souter told CNBC on Friday that he saw the company’s recovery from coronavirus lows continue until the end of 2020, an optimistic sign for the wider US economy.

The rail operator reported third-quarter earnings earlier in the day, reporting revenue of $ 660 million, which missed Wall Street’s $ 663 million forecast. Earnings per share of Kansas City South of $ 1.96, excluding elements, is better than analysts’ forecast for earnings per share of $ 1.90.

“In our industrial and consumer economy, we believe it will continue to be moderately strong from now until the end of the year,”

; said CEO Patrick Otensmeier in “Closing the Bell.”

Kansas City South also raised its annual targets on Friday, saying it expects earnings per share to be slightly higher on an annual basis. Shares of the company closed 2.72% on Friday to $ 179 per share. The stock has grown by nearly 17% this year.

Cargo volumes decreased by 4% in the third quarter compared to a year ago. But it’s getting better, Otensmeyer said. “We’ve improved a bit since last year and certainly above pre-Covid levels,” he said.

The Kansas City South Railway Locomotive (KSC) passes through Knoche Yard in Kansas City, Missouri, on Tuesday, January 7, 2020.

Whitney Curtis Bloomberg | Getty images

Railway operators, who are exposed to many different industries, are often seen as bells for the economy. The United States has added millions of jobs in recent months after a sharp drop in pandemic employment, and sectors such as housing have seen impressive strength. However, there are now questions about the sustainability of the recovery, especially after Congress has failed to come to terms with another round of stimuli.

Otensmeier said Kansas City’s strongest segment is refined petroleum products, largely driven by the transfer of fuel from coastal Gulf refineries in Mexico. The company also has experience in its automotive segment, he said, as the automotive industry recovers from the coronavirus slowdown.

Ottensmeyer, on the other hand, said Kansas City Southern has noticed a weakness in its intermodal volumes, which include multiple modes of transportation. He said they were lagging behind in the industry there and “it’s related to some service disruptions, some problems that are happening in Mexico that we’re trying to deal with, that have made us lose some business, at least for a while. time. “

Overall, Kansas City South has seen an “amazing” V-shaped recovery in supply volumes from pandemic lows, according to Ottensmeyer. He said the last few months have been like a roller coaster ride, “if you think about the things we have to do without knowing what’s coming, with volumes falling so fast and drastically in the second quarter, then come back 90 days later. “

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