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.

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. 

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.

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. 

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%