Economic Slowdown Drags Union Pacific Q3 Profit Down 2%
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Union Pacific released third-quarter financial results Oct. 16 that showed declines in net income and revenue, and also a quarterly record for operating ratio.
The Class I railroad reported net income of $1.55 billion, or $2.22 per share. This compares with $1.59 billion, or $2.16 per share, in third quarter 2018.
Union Pacific was forecast to earn $2.31 a share, according to Wall Street analysts surveyed by FactSet.
Revenue was $5.72 billion, down from $5.93 billion in the year-earlier quarter.
Union Pacific ( $UNP ) Reports Third Quarter Results; All-Time Best Quarterly Operating Ratio of 59.5% https://t.co/B5mmmoKdqU — Union Pacific (@UnionPacific) October 17, 2019
But the Omaha, Neb., railroad delivered an operating ratio of 59.5 compared with 61.7 in the third quarter last year.
“Given the challenging volume environment, we delivered solid third-quarter financial results, including an all-time best quarterly operating ratio,” CEO Lance Fritz said in an earnings report call. “The work our employees are doing as part of Unified Plan 2020 is foundational to the company’s success, and I am confident there are additional improvement opportunities going forward for our customers and shareholders.”
Unified Plan 2020, adopted by the company in September 2018, is an operating agenda that implements precision scheduled railroading principles. The concept was created by Hunter Harrison, the railroad icon who died in 2017.
Company officials said weaker demand from a wide range of customers hurt its third-quarter financial picture. Operating revenue of $5.5 billion was down 7% compared with 2018’s $5.9 billion.
Revenues declined in its four freight sectors — agriculture products, energy, industry and premium freight.
The slowdown in the freight rail industry is linked to a slump in manufacturing.
The decline in carloads for large U.S. railroads widened to 5.5% in the third quarter, the biggest drop in three years, according to weekly reports from the Association of American Railroads. Shipments are down for autos, coal, grain, chemicals and consumer goods, with crude oil the only bright spot.
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