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Thursday, October 22, 2020
Government Union Pacific 1Q profit up 6% despite less freight

Union Pacific 1Q profit up 6% despite less freight

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OMAHA, Neb. (AP) — Union Pacific’s first quarter profit chugged ahead 6% even though the railroad hauled 2% fewer carloads and dealt with massive flooding.

The Omaha, Nebraska-based railroad said Thursday it earned $1.39 billion, or $1.93 per share. That’s up from $1.31 billion, or $1.68 per share, last year.

The nine analysts surveyed by Zacks Investment Research expected Union Pacific Corp. to report earnings of $1.89 per share.

The railroad’s revenue declined 2% to $5.38 billion in the period, which did not meet Street forecasts. Six analysts surveyed by Zacks expected $5.48 billion.

Union Pacific has been working to streamline its operations by running trains on a tighter schedule so it can use fewer locomotives, cars and employees to move the same freight. The railroad said its expenses declined 3% to $3.42 billion.

CEO Lance Fritz said those efforts helped the railroad rebound quickly from severe cold weather and flooding along the Missouri River and its tributaries. Most of the reduced volume in the quarter was related to the weather challenges.

But Fritz said the ongoing U.S. trade disputes have had a clear impact on grain shipments, which dropped 7% in the quarter.

Fritz said it’s important for Congress to act soon to approve the new North American trade agreement between America, Canada and Mexico. Then hopefully the trade dispute with China can be resolved.

The railroad said it still expects its volume to grow at a low-single-digit rate this year while it cuts expenses by at least $500 million.

Citi analyst Christian Wetherbee said the quarter seemed a bit better than investors feared.

In afternoon trading, the stock rose nearly 5% to $177.40 in afternoon trading.

Union Pacific operates 32,400 miles of track in 23 Western states.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNP at https://www.zacks.com/ap/UNP

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