Kirby’s Third Quarter Profit Hit by Pandemic and also Hurricanes
Houston- based Kirby Corporation, the leading residential container barge driver, saw revenue autumn in the 3rd quarter of 2020 contrast to in 2014 as the COVID-19 pandemic dragged down need for oil items.
The business reported 2020 third quarter results prior to the marketplace opened up onThursday Net profits were $27.5 million, or $0.46 per share, on $ 320.6 million in profits. This compares to 2019 3rd quarter internet profits of $48.0 million or $0.80 per share, and also $412.7 million in profits. Kirby Corporation’s (NYSE: KEX) share rate was up over 4% on the day to $37.95.
Kirby runs the biggest fleet of container barges for delivering fluid mass items on the inland and also near-coastal rivers of the the United States, consisting of the Mississippi River System and alsoGulf Intracoastal Waterway The business stated reduced profits show interruptions brought on by the COVID-19 pandemic and also an excessively energetic cyclone period.
“The COVID-19 pandemic and the associated economic slowdown adversely impacted Kirby’s businesses during the third quarter,” stated David Grzebinski, Kirby’s President and also Chief Executive Officer. “Although general economic activity was slightly improved and increased profitability was realized in the distribution and services segment, the marine transportation businesses experienced lower volumes and barge utilization.”
“In marine transportation, our inland and coastal businesses were heavily affected by weak demand for liquid products including refined products, crude, and black oil. Throughout the third quarter, refinery utilization was well below historical norms as many of our customers experienced low consumer demand, high product inventories, and unfavorable economics,” stated Grzebinski.
“Additionally, a very active hurricane season resulted in further reductions in volumes and widespread disruptions including prolonged closures of some refineries, chemical plants, waterways, and major ports. These challenging market conditions during the quarter contributed to low barge utilization and limited spot market activity,” he included.
In the inland market, Kirby reported ordinary barge application in the 3rd quarter in the reduced 70% array, contrasted to the reduced 90% array in the 2019 3rd quarter. Barge quantities were greatly affected by reduced refinery and also chemical plant application and also decreased need for improved items and also petrochemicals.
But Grzebinski forecasts organization has actually bottomed. Speaking on 2020’s 4th quarter expectation, he commented:
“Although Kirby continues to be challenged by unprecedented declines in demand as a result of the COVID-19 pandemic, our business activity and utilization levels have bottomed. Economic activity is slowly improving, and we have seen pockets of increased demand. While this is encouraging, in the fourth quarter our results are expected to be impacted by continued low barge utilization and pricing pressure, normal seasonality from weather in marine, and likely, customer budget exhaustion in distribution and services. Looking beyond 2020, while the timing and magnitude of a material economic recovery are unclear, we believe this demand driven downturn is temporary and demand will rebound sometime in 2021. In marine, as discussed before, pricing typically does not improve until barge utilization is in the mid-80% range. Nevertheless, Kirby is in a strong financial position, and we will continue to tightly manage our costs, maintain capital discipline, generate free cash flow, and pay down debt.”