Union Pacific Corporation (UP) has reported a 2016 fourth quarter net income of $1.1 billion, or $1.39 per diluted share, compared to $1.31 per diluted share in the fourth quarter 2015. Full year net income for 2016 was $4.2 billion, or $5.07 per diluted share, compared to the 2015 net income of $4.8 billion, or $5.49 per diluted share, an 11 percent and 8 percent decrease, respectively.
“While full-year volumes were down substantially year over year, we did see declines moderate in the fourth quarter,” said UP Chairman, President and CEO Lance Fritz. “As we worked through the challenges of the year, we remained focused on the strategy we live each day through our six value tracks. Executing on these value tracks enables us to run a safe, efficient, and productive railroad while providing our customers an excellent value proposition.”
Operating revenue in the fourth quarter dropped by 1 percent to $5.2 billion compared to 2015. Fourth quarter operating income totaled $2 billion, an increase of 2 percent from the 2015 fourth quarter. The company operating ratio improved 1.2 points to 62 percent for the 2016 fourth quarter. Business volumes decreased by 3 percent with declines in all business groups with the exception of agricultural products, which grew 8 percent.
Freight revenue for the 2016 fourth quarter dropped by 1 percent compared to the same time period in 2015. Volume declines and lower fuel surcharge revenue more than offset core pricing gains.
Operating revenue for the 2016 year saw a total of $19.9 billion compared to $21.8 billion in 2015. Operating income at $7.3 billion dropped 10 percent from the operating income in 2015. Operating ratio improved 0.4 points to 63.5 percent.
Full year freight revenue decreased 9 percent to $18.6 billion, with carloadings down 7 percent compared to 2015. Declines were seen in the chemicals, coal, industrial products and intermodal business groups.
“Looking to 2017, we are fairly optimistic about some of the macro-economic indicators that drive our core business,” added Fritz. “Higher energy prices, favorable agricultural markets and improving business and consumer confidence all support a return to positive volume growth this year. We continue to have confidence in the strength and diversity of the Union Pacific franchise, which will position us well to safely and efficiently leverage stronger volumes as our markets begin to rebound. We will continue to execute on our strategic value tracks to provide our customers an excellent service experience while generating strong returns for our shareholders.”