Union Pacific Corp. warned Tuesday that fourth-quarter shipping volumes will be lower than originally predicted amid the worsening economy.
Presenting at the Citi Investment Research Transportation Conference, Chief Financial Officer Rob Knight said volumes are down about 9 percent so far in the fourth quarter, due to slowdowns in auto and other consumer-related shipments. The Omaha, Neb.-based railroad originally predicted fourth-quarter volumes would fall about 5 percent.
"The American consumer appears to be taking this holiday season off," he said.
Auto shipments make up 8 percent of Union Pacific's business. General Motors Corp. is currently the railroad's second-largest single customer, according to its Web site.
Knight said lumber carloads also still are weak, and chemical shipments are sluggish following third-quarter hurricanes. Still, shipments of some-energy related products such as wind turbines and frac sand — used in oil drilling — are strong, he said.
Union Pacific also maintained its fourth-quarter earnings forecast of $1.25 to $1.35 per share, predicting that lower diesel costs will offset volume declines.
Analysts polled by Thomson Reuters, on average, predict a profit of $1.34 per share.
And looking to 2009, Knight predicts that demand will remain muted at least until the second half of the year.
Shares rose 43 cents to $57.66 in morning trading.