Union Pacific’s Q2 net income plunges 19%

The Class I railroad’s net income and operating revenues fell 19 percent and 12 percent year-over-year, respectively, in Q2 2016, as the strong U.S. dollar on exports and weak demand for consumer goods continues to put strain on the company.    Union Pacific Corporation’s net income for the second quarter of 2016 tumbled 19 percent year-over-year to $979 million, according to the company’s most recent unaudited financial statements.
   Analysts polled by Thompson Reuters were right on track with predicting an EPS of $1.17 per share with revenues of $4.8 billion for the quarter.
   Looking back at the second quarter of 2015, Union Pacific’s EPS totaled $1.38 per share, while revenues had reached $5.1 billion.
   Union Pacific CEO Lance Fritz attributed the negative Q2 2016 quarter to the strong U.S. dollar on exports, along with weak demand for consumer goods. The Wall Street Journal said that in an interview, Fritz expressed how business was being affected by competition resulting from excess capacity in all modes of freight transport, including barges, trucking, shipping and rail.
   During the quarter, freight revenues made up 92.3 percent of the company’s total operating revenues. Freight revenues fell 13 percent from the second quarter of 2015 to $4.4 billion, as volumes fell and lower fuel surcharge revenues more than offset core pricing gains.
   Broken down into individual business segments, compared to the second quarter of 2015, freight revenues for agricultural products fell 3 percent to $845 million, while chemicals were down 5 percent to $864 million, automotive was down 13 percent to $488 million, industrial products were down 14 percent to $830 million, intermodal was down 16 percent to $909 million and coal was down 27 percent to $494 million.
   Meanwhile, second quarter business volumes, as measured by total revenue carloads, slipped 11 percent year-over-year.
   “Volume declines in coal, intermodal, industrial products, chemicals and automotive more than offset growth in agricultural products,” Union Pacific said.
   Based out of Omaha, Neb., Union Pacific connects 23 states in the western two-thirds of the country by rail.