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Union Pacific, CSX warn of coronavirus’ potential impacts on financial returns

A Union Pacific train. Image: Flickr/Chu Shau-Luen

Union Pacific (NYSE: UNP) and CSX (NASDAQ: CSX) said the coronavirus pandemic is creating huge uncertainties that could translate into “material” financial impacts on the companies’ financial results, according to filings with the Securities and Exchange Commission (SEC).

Union Pacific’s (UP) financial outlook for 2020, which the company gave earlier this year, doesn’t include the potential impact of COVID-19, according to UP’s March 31 filing to the SEC. UP will disclose its first quarter 2020 financial results on April 23.

“The impact of the COVID-19 pandemic on the company’s 2020 financial and operating results, which may be material, is highly uncertain and depends on numerous factors including but not limited to the impact of federal, state and local government regulations; the effect of the pandemic’s economic impact on demand for the company’s services; and potential disruption to global supply chains,” UP said in its filing. 

UP had said during its fourth-quarter 2019 earnings call in January that it was striving to reach an operating ratio below 60% in 2020. Operating ratio (OR), which is calculated by dividing operating expenses by revenue, can be a measure of a company’s financial health, with a lower OR implying improving profitability. 


The railroad serves the U.S. West Coast ports, which were hit hard by the coronavirus outbreak that started in China earlier this year amid an increase in canceled sailings. While Chinese manufacturing has started to return to normal, according to reports, canceled sailings could occur again because of the pandemic’s impact on North American demand.

Eastern U.S. rail carrier CSX also told the SEC that the coronavirus pandemic could affect CSX’s financial results, although the magnitude of the impact is hard to predict.

“The ultimate magnitude of COVID-19, including the extent of its impact on the company’s financial and operating results, which could be material, will be determined by the length of time that the pandemic continues, its effect on the demand for the company’s transportation services and the supply chain, as well as the effect of governmental regulations imposed in response to the pandemic,” CSX said in a March 26 filing to the SEC. CSX said it was providing an update on CSX’s response to the pandemic in connection with a previously announced registered offering of senior notes.

“Public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing and the adoption of work-from-home and online learning by companies and institutions, could adversely affect demand for the commodities and products that the company transports, including import and export volume,” CSX said. “In addition, COVID-19 and the related initiatives may result in supply chain disruption, which could have an adverse impact on volumes and make it more difficult for the company to serve its customers.” 


CSX continued, “The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information, which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. Moreover, our operations could be negatively affected if employees are quarantined as the result of exposure to a contagious illness.”

CSX also said its initial financial outlook for 2020 given in January doesn’t reflect the potential impacts of the coronavirus. The company had said in January that it expected 2020 revenue to be flat to 2% lower from 2019. 

CSX will announce its first-quarter 2020 results on April 22.

Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.