Rail Hot Streak Continues: Union Pacific Profits Up 19%, Beat Estimates
It’s been a strong week for the freight rail carriers as Union Pacific Corp. announced July 20 that profits jumped 19% in the second quarter after CSX Corp. and Canadian Pacific Railway posted strong gains earlier in the week.
Union Pacific Corp. recorded $1.2 billion in profits for the three-month period ending June 30, or $1.45 per share. The results easily beat the Bloomberg News consensus forecast of industry analysts, which called for $1.1 billion in profits or $1.38.
One year ago, the totals were $979 million or $1.17.
Revenue rose 10% to $5.3 billion, of which $4.9 billion came from freight transportation.
“I am pleased with our results through the first six months and look forward to continuing our momentum through the remainder of the year,” Union Pacific Chairman and CEO Lance Fritz said.
Revenue grew for all major services, consisting of intermodal, chemical, automotive, agricultural, industrial and coal transportation.
Coal continued its rebound this year from the doldrums of the past several years. Revenue rose 25% to $619 million, revenue per carload increased 7% to $2,173 and volume grew 17% to 285,000.
Intermodal revenue increased 3% to $939 million. Volume went up 2% to 824,000 carloads, and revenue per carload was slightly higher at 1% to $1,140.
Industrial products — the largest contributor to revenue — also had double-digit growth. Revenue jumped 24% to $1 billion, volume was up 15% to 315,000 carloads, and revenue per carload increased 8% to $3,271.
The quarterly operating ratio improved 340 basis points to 61.8%.
Through the first half of 2017, Union Pacific has netted $2.24 billion in profits, 14% higher than 2016, equaling $2.77 per share. Revenue is 8% higher to $10.4 billion. Bloomberg News forecast $2.17 billion in profits or $2.70, and $10.3 billion in revenue.
“Absolute business volumes should be stronger in the second half than the first half, although year-over-year comparisons will be more challenging. In this environment we will focus on our growth opportunities,” Fritz said. “We are confident these efforts will generate top-line growth, margin improvement and greater returns for our shareholders.”
