On July 25, 2024, Union Pacific Corp (UNP, Financial) released its 8-K filing for the second quarter of 2024, reporting a net income of $1.7 billion, or $2.74 per diluted share. This marks a 7% increase from the $1.6 billion, or $2.57 per diluted share, reported in the same quarter of 2023. The results surpassed analysts' estimates of $2.72 per share.
Company Overview
Omaha, Nebraska-based Union Pacific is the largest public railroad in North America. Operating on more than 30,000 miles of track in the western two-thirds of the U.S., UP generated $24 billion of revenue in 2023 by hauling coal, industrial products, intermodal containers, agriculture goods, chemicals, fertilizers, and automotive goods. UP owns about one-fourth of Mexican railroad Ferromex and historically derives roughly 10% of its revenue hauling freight to and from Mexico.
Performance and Challenges
Union Pacific Corp (UNP, Financial) reported operating revenue of $6.0 billion for Q2 2024, a 1% increase driven by core pricing gains and increased volume, partially offset by business mix and reduced fuel surcharge. Freight revenue excluding fuel surcharge revenue grew by 2% as revenue carloads saw a slight increase. The operating ratio improved by 300 basis points to 60.0%, aided by lower quarterly fuel prices and a sale of intermodal equipment.
Despite these gains, the company faced challenges such as weather-related disruptions impacting network performance. However, improvements in safety and operational excellence were noted, with year-to-date reportable personal injury and derailment rates both showing improvement.
Financial Achievements
Union Pacific Corp (UNP, Financial) achieved a 9% increase in operating income, reaching $2.4 billion. This growth was driven by core pricing gains, operating efficiency, and the sale of intermodal equipment. The company's focus on operational excellence and safety has been pivotal in maintaining its competitive edge in the transportation industry.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Operating Revenue | $6.0 billion | $5.96 billion | 1% |
| Operating Income | $2.4 billion | $2.2 billion | 9% |
| Net Income | $1.7 billion | $1.6 billion | 7% |
| Earnings Per Share (Diluted) | $2.74 | $2.57 | 7% |
| Operating Ratio | 60.0% | 63.0% | -3.0 pts |
Commentary
"Our second quarter performance demonstrates the team’s ability to deliver strong results," said Jim Vena, Union Pacific Chief Executive Officer. "This provides further proof that our strategy to be the best in safety, service, and operational excellence will drive success. The entire Union Pacific team is energized behind this strategy and wants to win. As we build on the foundation we’ve laid over the past 12 months, we look forward to demonstrating what’s possible for our great company."
Analysis
Union Pacific Corp (UNP, Financial) has shown resilience and strategic prowess in navigating the challenges of the transportation industry. The company's ability to improve its operating ratio and achieve significant growth in operating income highlights its operational efficiency and effective cost management. The slight increase in revenue carloads and core pricing gains further underscore the company's robust market position.
Looking ahead, Union Pacific's focus on safety, service, and operational excellence will be crucial in maintaining its competitive edge. The company's positive profitability outlook, despite uncertain volume projections, indicates strong internal capabilities to adapt and thrive in varying economic conditions.
For more detailed financial information and insights, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Union Pacific Corp for further details.
