Union Pacific (UP) has reported its 2016 third quarter financial results with net income of $1.1 billion, or $1.36 per diluted share, compared to the 2015 third quarter’s $1.3 billion net income, or $1.50 per diluted share.
In the 2016 third quarter, business volumes, measured by total revenue carloads, dropped by 6 percent from the same quarter last year. Agricultural products grew by 11 percent while declines were seen in coal, intermodal, industrial products, chemicals, and automotive.
“Continued momentum from our productivity initiatives, as well as positive core pricing, helped partially offset the decline in total carload volumes,” said UP Chairman, President and CEO Lance Fritz. "While many of the same volume challenges have continued throughout the year, we are keeping a laser focus on our six value tracks. This strategy ensures we provide our customers with an excellent value proposition and service experience, while efficiently and safely managing our resources.”
Operating revenue declined by 7 percent to $5.2 billion compared to last year’s third quarter. The company’s operating ratio of 62.1 percent was unfavorable by 1.8 points compared to the record third quarter 2015, but improved 3.1 points sequentially. Operating income was down by 11 percent to $2 billion.
Freight revenues decreased 7 percent, with volume declines and lower fuel surcharge revenue more than offsetting core pricing gains.
"The macroeconomic environment still has its challenges - an unstable global economy, the relatively strong U.S. dollar, and continued soft demand for consumer goods,” continued Fritz. “However, certain segments of the economy, such as grain and energy, are showing signs of life."
"Closing out 2016 and heading into next year, we are optimistic about the opportunities that lie ahead,” Fritz added. “In the coming months we will continue to do what Union Pacific does best - operate a safe, efficient, and productive network while providing an excellent customer experience and delivering solid shareholder returns."