Union Pacific Net Income Slips 13% as Freight Volume Declines
Union Pacific Corp. net income slipped 13% to $1.13 billion, or $1.36 per share, hurt by lower intermodal and other freight volume and weaker pricing.
The largest U.S. railroad reported 7% less revenue at $4.84 billion, a 6% drop in shipments and a 2% drop in revenue per shipment. International intermodal freight fell 11%, reflecting a drop-off tied to the bankruptcy of Hanjin Shipping. That failure shaved 1 cent per share off the earnings in the third quarter.
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“Management’s commentary on the macroeconomic environment remains understandably guarded, but a review of its 2016 volume outlook versus the prior quarter appears to be slightly less pessimistic,” said a report from Robert W. Baird analyst Ben Hartford, which noted a sequential drop in pricing.
The largest drop-off was 14% in coal, which along with international intermodal hurt profit margins. The agricultural products group was the sole growth segment at 11%.
Domestic intermodal performed better, declining just 2%. In the quarter, domestic intermodal was 54% of all freight in that category.
