Union Pacific Fourth-Quarter Net Profit Slips 10%

Union Pacific (NYSE: UNP)'s fourth-quarter net profit dipped 10% amid a drop in operating revenue.

Benzinga · 01/23/2020 16:23

Union Pacific (NYSE: UNP)'s fourth-quarter net profit dipped 10% amid a drop in operating revenue.

Net income for the fourth quarter of 2019 totaled $1.44 billion, or $2.02/diluted share, compared with $1.55 billion, or $2.12/diluted share. Operating revenue in the fourth quarter was $5.2 billion, a 9% drop from the same period in 2018. 

A chart showing the financial results of the fourth quarter of 2019.

Source: Union Pacific

Fourth-quarter operating revenue slipped amid fewer shipments of agricultural, premium (including intermodal) and energy products, although industrial volumes were flat, Union Pacific (UP) said Thursday. Freight revenue dipped 10% to $4.89 billion amid lower volumes and a decreased fuel surcharge revenue.

Although revenue was down, operating expenses also fell in the fourth quarter. Operating expenses totaled $3.11 billion, a 12% decline from the fourth quarter of 2018.

Source: Union Pacific

The dip in operating expenses contributed to UP reaching an operating ratio of less than 60% in the third consecutive quarter. Fourth-quarter operating ratio was 59.7%, compared with 61.6% in the fourth quarter of 2018. Operating ratio — a measure of a company's financial health — can be calculated by dividing operating expenses by revenue.

Service metrics also improved in the fourth quarter, with freight car velocity up 5% to 220 daily miles/car, train speed up 1% to 26.2 miles per hour and terminal dwell down 13% to 23.3 hours. Terminal dwell is the amount of time a train stays at a terminal. 

Source: Union Pacific

 

Rail 2019 Value 2018 Value Y/Y Gross Change Y/Y % Change
Freight revenue (in millions) $4,851.0 $5,387.0 ($536.0) -9.9%
Carloads (000s) 1,993 2,242 -249 -11.1%
Revenue per carload $2,435 $2,403 $32 1.3%
Gross ton miles (in millions) 200,801.0 230,537.0 -29,736 -12.9%
Revenue per ton mile (in millions) $99,932 $115,608 -$15,676 -13.6%
Employee counts 34563 41696 -7,133 -17.1%
Train velocity (mph) 26.2 26 0 0.8%
Dwell time (hours) 23.3 26.9 -4 -13.4%
OR% 59.7% 61.6% -1.9% -3.1%
EPS $2.02 $2.12 -$0.10 -4.7%

Image by Pit Karges from Pixabay