Union Pacific (UP) has reported its 2016 second quarter financial results with net income of nearly $1 billion, or $1.17 per diluted share, compared to the 2015 second quarter’s $1.2 billion net income, or $1.38 per diluted share.
In the 2016 second quarter, business volumes, measured by total revenue carloads, dropped by 11 percent from the same quarter last year. Declines in coal, intermodal, industrial products, chemicals, and automotive more than offset growth in agricultural products.
"While the second quarter was again challenging from a volume perspective, we continued focusing on initiatives that are squarely in our control, such as being productive with our resources, providing our customers with excellent service, and improving our safety performance," said UP Chairman, President and CEO Lance Fritz.
Operating revenue declined by 12 percent to $4.8 billion compared to last year’s second quarter. The company’s operating ratio of 65.2 percent was unfavorable by 1.1 points compared to the second quarter 2015. Operating income was down by 15 percent to $1.7 billion.
Freight revenues decreased 13 percent, with volume declines and lower fuel surcharge revenue more than offsetting core pricing gains.
"A soft global economy, the negative impact of the strong U.S. dollar on exports, and relatively weak demand for consumer goods will continue to pressure volumes through the second half of the year," said Fritz. "However, we see potential bright spots in certain segments of our business if key economic drivers continue to strengthen as they have in recent weeks.”
“Beyond the impact of the current macro environment, we are implementing a strategy that will make us a stronger company for the future. In the months and years ahead we will continue to create competitive advantages for our customers, enhanced safety and satisfaction for our employees, strength in our communities, and solid returns for our shareholders," concluded Fritz.