Even with a significant year-on-year drop in US coal volumes during the second quarter, Genesee & Wyoming CEO Jack Hellmann Monday said the commodity's decline wasn't as extreme as expected.
In a second-quarter earnings call, Hellmann called coal a "slight outperformer" during the three-month period because of volumes gains during May and June when temperatures rose and utility demand increased nationwide.
The CEO said "Mother Nature has been extremely cooperative this summer" and at year's end coal could be "a little stronger than we thought before."
G&W's Q2 coal and coke shipments totaled 46,237 carloads in Q2, down 27%, or about 17,000 carloads, compared to the year-ago period. Coal and coke revenues equaled $15.1 million, down 32% from last year.
Through the first half of the year, G&W coal and coke volumes are down 33.7% to 94,915 carloads.
COO Michael Miller said the railroad's coal business hit the bottom during the spring before an increase in volumes heading out of the shoulder season. He said more coal train sets have come online with the onset of the summer and there's the potential for additional sets to move onto the tracks this year.
Though utility coal stockpiles are declining, inventories are still about 30% higher than the 5-year average, Miller said. Another 20 to 30 days of burn need to come out of stockpiles before volumes reach more normal totals, he added.
The drop in total coal carload volumes has not impacted the railroad's coal mix. Miller said Powder River Basin shipments account for about 60% of the railroad's coal business, with the majority of the remaining volumes split between the Illinois Basin and Northern Appalachia.
Overall, G&W reported $501.4 million in operating revenues in Q2, down 7.5% from the year-ago period, and net income of $48.4 million, down 8.4%.
