Volumes fall in Q2 at three major railroads

Canadian National, Canadian Pacific and Union Pacific railways have seen volumes drop 4 percent, 3 percent and 6 percent, respectively, so far in the second quarter.    Although official Q2 volume statistics won’t be released for another month, Canadian National (CN), Canadian Pacific (CP) and Union Pacific (UP) railways have all seen a decrease in volumes in the second quarter, according to recent earnings notes from investment advisor BB&T Capitol Markets.
   For UP, volumes are down 6 percent so far in the second quarter. Coal and metals are both down 27 percent and grain is down 20 percent quarter-to-date at the railway. Automobile volumes, on the other hand, are up 9 percent and intermodal is up 2 percent. Union Pacific’s stock is down 15 percent QTD, according to BB&T.
   As a result, BB&T Capital Markets has cut its Q2 earnings per share (EPS) estimate for Union Pacific from $1.50 to $1.36 per share and its full-year 2015 EPS estimate from $6.15 to $5.90 per share. The financial advisor company likewise cut its 2016 forecast from $6.95 to $6.70 per share.
   For CN, volumes are down 4 percent QTD. Coal is down 28 percent, metal and minerals are down 10 percent, and grain is down 16 percent. CN’s stock is down 10 percent QTD.
   BB&T said it cut its Q2 EPS estimate for CN from $1.10 Canadian (U.S. $0.89) to C$1.05 (U.S. $0.85) per share and its full-year 2015 estimate from C$4.22 to C$4.14 per share. The company cut its 2016 forecast from C$4.70 to C$4.60 per share.
   For CP, volumes are down 3 percent QTD. Unlike CN and Union Pacific, CP has seen a 1 percent increase in coal volumes in the second quarter. Crude oil, grain and intermodal volumes, however, are down 26 percent, 25 percent and 3 percent, respectively. CP’s stock is down 8 percent QTD.
   BB&T has cut its Q2 EPS estimate for CP from C$2.55 to C$2.46 per share and its full-year 2015 estimate from C$10.82 to C$10.58 per share. The company cut its 2016 forecast from C$13.05 to C$12.85 per share.
   BB&T attributed the overall decrease in coal volumes primarily to low natural gas prices, which have resulted in less coal usage. Low commodity prices, a strong USD, and weak exports have hurt grain volumes, while metal volumes are down due to lagging US steel production and an increase in foreign imports, BB&T Capital Markets said.