Railroad Industry Snapshot: Cost Reduction In Focus Amid Top Line Pressure

+2.32%
Upside
245
Market
251
Trefis
UNP: Union Pacific logo
UNP
Union Pacific

The railroad industry is experiencing top line pressure, with three prominent rail companies covered by Trefis expected to report a decline in revenue in 2016. This is largely due to a decline in shipments, mostly due to a sharp decline in coal shipments, due to weakness in demand for coal by utilities as a result of soft natural gas prices. In addition, weak oil prices have also adversely affected these companies’ fuel surcharge revenues. With declining revenues, rail companies have focused on cost reduction. Due to a combination of volume-related cost reduction and improvements in productivity, all three rail companies are expected to report better EBITDA margins this year as compared to last .

Rail Ind Snapshot-Cost Reduction

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Union Pacific

 

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