OMAHA - Union Pacific Corporation (NYSE: NYSE:UNP) announced its second-quarter financial results, revealing a modest increase in operating revenue and a significant improvement in operating income.
The railroad operator reported a quarterly EPS of $2.74, narrowly surpassing the analyst estimate of $2.71. However, revenue for the quarter was $6 billion, slightly below the consensus estimate of $6.06 billion, marking a 1% increase from the previous year.
CEO Jim Vena highlighted the company's commitment to safety, service, and operational excellence as key factors in driving the company's success. "This provides further proof that our strategy to be the best in safety, service, and operational excellence will drive success," Vena stated.
The company's operating ratio improved by 300 basis points to 60.0%, with the sale of intermodal equipment contributing positively, while lower fuel prices and an environmental remediation compliance order had minor negative impacts.
Operating income grew by 9% to $2.4 billion, fueled by core pricing gains, operating efficiency, and the aforementioned intermodal equipment sale. Union Pacific's performance metrics remained steady or improved, with a 6% increase in locomotive productivity and a 5% improvement in workforce productivity. Additionally, the company maintained flat freight car velocity and achieved a 1% improvement in fuel consumption rate.
Looking ahead, Union Pacific's second-half volume outlook is uncertain due to economic indicators and coal demand, but the profitability outlook remains positive.
The company plans to continue its strong service product, improve network efficiency, and maintain solid pricing. Union Pacific has also affirmed its long-term capital allocation strategy, with a capital plan of $3.4 billion and share repurchases of approximately $1.5 billion expected in 2024.
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