US-based barge operator Kirby has reported net earnings of $25 million for the second quarter (Q2) of 2020, down from $47.3 million for the same period last year.
Consolidated revenues were also down, from $771 million to $541.2 million.
Commenting on results, David Grzebinski, Kirby’s President and Chief Executive Officer, said: ‘The dramatic economic slowdown associated with the COVID-19 pandemic in the second quarter was felt across our marine transportation and distribution and services businesses. We responded by aggressively lowering costs across the company and were able to generate solid earnings and strong cash flow.’
Grzebinski offered the prospect of some respite, as he noted that: ‘Although the demand impacts have continued into the third quarter, activity appears to have bottomed and is starting to slowly improve.’
The company’s marine transportation business has taken a big hit from the pandemic.
‘With demand for many liquid products down significantly during the quarter,’ said Grzebinski, ‘refiners scaled back their utilisation levels into the high 60% range before it gradually improved into the mid-70% range, and chemical plant utilisation fell to near 70%. As a result, demand for barge transportation weakened as the quarter progressed, and when combined with favourable summer operating conditions, our barge utilisation fell into the mid-70% range in inland and the low 70% range in coastal by the end of June. To offset the impact of these activity declines, we aggressively implemented additional cost reductions across the business, significantly reducing horsepower, operating costs, and general and administrative expenses. Despite a 6% sequential reduction in segment revenue, our cost reduction efforts contributed to a sequential improvement in segment operating margins from 12.6% to 13.5%.’
Looking forward, Kirby expects revenues for the inland marine market will ‘sequentially decline in the third quarter’, while revenues in the coastal market will ‘modestly improve sequentially’.