Union Pacific Income Reaches Record

Union Pacific (UNP) said fourth-quarter income reached a record as volumes advanced for the railroad company, while operating revenues came in just ahead of Wall Street’s expectations. Net income came in at $2.12 per share, beating the consensus on Capital IQ for $2.06 and the adjusted year-earlier figure of $1.53 a share. Total operating revenue rose 6% to $5.76 billion, while analysts were expecting $5.73 billion.

Fourth-quarter business volume, measured by revenue carloads, rose 3% year-on-year as strong growth in industrial and premium shipments offset declines in agricultural products and energy. Freight revenue gained 6% over the same period in 2017 “as positive volume, increased fuel surcharge revenue and core pricing gains all contributed to the increase.” The gains were partially offset by a “negative business mix.”

Quarterly train speed was 3% slower than the fourth quarter of 2017 at 24.4 miles per hour, while terminal dwell improved 18% to 26.7 hours. The company said its average quarterly diesel fuel price was $2.33 per gallon, up 15% from a year earlier. “We are optimistic that continued economic growth, improving service performance and the strength of our diverse franchise will drive positive volume and revenue growth in 2019,” said Lance Fritz, chief executive of the company. Union Pacific’s shares rose 3.3% in morning trading Thursday.

Fritz said they’re “advancing the implementation schedule for Unified Plan 2020,” a new operating plan that brought in different principles to drive service reliability, increased efficiency and reduced network complexity. “Since starting this initiative in October, we have improved on-time service for our customers while at the same time eliminating excess costs and improving the utilization of network resources,” he said. Energy freight revenue fell 8% in the quarter, agricultural products was up 5%, industrial rose 10% and premium was up 15%.