Union Pacific (UP) announced its first-quarter 2020 net income was $1.5 billion, or $2.15/diluted share, compared with $1.4 billion, or $1.93/diluted share, in the first quarter of 2019.
UP’s first-quarter OR was 59%, compared with 63.6% in the first quarter of 2019. Operating ratio, which is a company’s operating expenses as a percentage of its revenue, can be an indicator of a company’s financial health. A lower percentage implies improved financial health.
Operating revenue fell 3% to $5.2 billion year-over-year amid a 7% decline in first-quarter business volumes. Freight revenue slipped 3% to $4.9 billion amid lower volumes and a decrease in fuel surcharge revenue despite core pricing gains and a “positive” business mix, UP said.
Operating expenses decreased 10% to $3.1 billion year-over-year.
Meanwhile, average train speed rose 3% to 25.4 miles per hour, while average terminal dwell fell 11% to 23.8 hours. Terminal dwell is the amount of time a train spends at a terminal.
The company expects carload volumes in the second quarter to be down by around 25% compared with the second quarter of 2019 as the COVID-19 pandemic plays out in North America and around the world. UP said it expects to maintain sufficient liquidity to sustain an extended period of lower volumes.
“Against the backdrop of the emerging COVID-19 pandemic and a challenging volume environment, we leveraged productivity to deliver strong financial results, including an all-time best operating ratio of 59%,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “We also made substantial improvement in employee safety, which is a testament to our dedicated employees. Our rail network has never run better, providing a safer, more reliable and efficient service product to our customers.”