Union Pacific Corp (UNP, Financial) released its third-quarter earnings report on October 19, 2023. The company reported a net income of $1.5 billion, or $2.51 per diluted share, compared to $1.9 billion, or $3.05 per diluted share, in the same period last year.
Performance and Challenges
Union Pacific faced several challenges in the quarter, including inflationary pressures and a drop in carloads. Despite these challenges, the company's CEO, Jim Vena, stated that they gained operational momentum throughout the quarter. He noted,
Operating and safety metrics are showing solid improvement, as we increase asset utilization. We are aligning the team around our strategy focused on being the best in safety, service, and operational excellence as we drive growth to the railroad."
Financial Highlights
Operating revenue for the quarter was $5.9 billion, down 10% due to reduced fuel surcharge revenue, lower volumes, and business mix, partially offset by core pricing gains. Operating income declined by 17% to $2.2 billion. The operating ratio was 63.4%, up 350 basis points, impacted negatively by rising fuel prices during the quarter.
Operating Performance
The company reported improvements in several operational metrics. Quarterly freight car velocity improved by 5%, locomotive productivity improved by 4%, and average maximum train length increased by 1%. However, quarterly workforce productivity decreased by 6%.
2023 Full Year Outlook
Despite the challenges faced in the third quarter, Union Pacific's full-year outlook for 2023 remains relatively unchanged. The company expects softness in consumer-related volumes to drive full-year volume expectations below Industrial Production. The capital plan for 2023 has been updated to $3.7 billion, and the company plans to maintain a dividend of $1.30 per quarter. No further share repurchases are planned for 2023.
Financial Tables Summary
The financial tables provided in the earnings report detail Union Pacific's income statement, balance sheet, and cash flow statement. The income statement shows a decrease in net income and earnings per share compared to the same period last year. The balance sheet and cash flow statement provide a comprehensive view of the company's financial position and cash operations.
Conclusion
Despite facing several challenges, Union Pacific Corp (UNP, Financial) continues to show solid improvements in its operating and safety metrics. The company remains committed to its strategy of safety, service, and operational excellence as it navigates through the current economic landscape.
