Markets

Greenbrier sees increase in international fertilizer, grain markets from Ukraine invasion

The invasion of Ukraine has created “great alternatives” in Europe and North America for bulk commodities similar to grain and fertilizer, executives with Oregon-based railcar producer The Greenbrier Firms mentioned on an earnings name for its second fiscal quarter that ended on Feb. 28.

“The tragedy in Ukraine and its influence on commodity costs are prone to have far-reaching penalties to the worldwide railcar trade, together with progress in rail freight in lots of sectors,” Government Chairman Invoice Furman mentioned in Greenbrier’s launch asserting quarterly outcomes.

Whereas Greenbrier (NYSE: GBX) hasn’t skilled any vital results on its enterprise because of the invasion, the corporate anticipates the worldwide marketplace for meals and fertilizers to be impacted as a result of Ukraine and Russia are main producers of fertilizer, wheat and grain, Furman informed traders throughout the earnings name on Wednesday.

Though Greenbrier has amenities in Romania and Poland, they’re in NATO nations and the corporate doesn’t anticipate the conflict in Ukraine to increase westward for now, Furman informed traders.

In the meantime, most of Greenbrier’s European clients are from Western Europe, and so whereas there are impacts to the availability chain as a result of the majority of supplies — iron and metal — come out of Russia and Ukraine, Greenbrier’s sourcing groups are “figuring out areas the place we are able to supply commodities and the suitable parts in different areas,” mentioned President and CEO Lorie Tekorius.

“We’re centered on sustaining our manufacturing, ensuring that we’ve received the correct stock on the bottom to construct the wagon and fulfill our clients’ wants,” Tekorius mentioned on the earnings name.

Apart from grain and fertilizer, altering vitality insurance policies in North America and Western Europe might create alternatives for rail transport of crude oil, ethanol and different merchandise, Furman mentioned in ready remarks throughout the name. 

“The commodity markets are historically main indicators for growth into rail freight. Most commodities shipped by rail are experiencing upward pricing stress from demand constraints as a consequence of both sanctions on Russia or decreased manufacturing from Russia and within the Ukraine,” Furman mentioned. “We count on rising international commodity costs and shifting commerce patterns to raise rail automobile demand in North America and Brazil and elsewhere on the planet.”

Second fiscal quarter monetary outcomes

Greenbrier noticed a internet second fiscal quarter revenue of $12.8 million, or 38 cents per diluted share, in contrast with a internet lack of $9.1 million, or a lack of 28 cents per diluted share, within the second fiscal quarter that ended on Feb. 28, 2021.

Larger revenues helped increase quarterly earnings. Total revenues had been $682.8 million, in contrast with $295.6 million within the prior 12 months. 

Price of income was $628 million, in contrast with $278 million, whereas promoting and administrative bills had been $54.7 million, in contrast with $43.4 million. 

Within the second fiscal quarter, Greenbrier delivered 4,800 railcar items. The deliveries are up 17% from the prior quarter and “pushed by our core North American market,” Tekorius mentioned. Lease fleet utilization elevated to 98%, whereas the railcar backlog as of Feb. 28 was at 32,100 items with a worth of $3.6 billion. New railcar orders totaled 8,500 and had been valued at $930 million,

“There’s little question that the market backdrop will stay dynamic, significantly with the conflict in Europe, inflation, provide chain points and the persevering with human influence of the pandemic [persisting] for a while,” Tekorius mentioned in ready remarks throughout the earnings name. “We’re managing the enterprise accordingly and preserve our optimistic market outlook. We count on our working metrics to proceed to enhance as we transfer by way of the following a number of quarters and past.”

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