Union Pacific 4Q profit falls 22 pct as freight volume slows

A combination of lower fuel and other operating expenses, partly as a result of lower shipment volumes, and productivity improvements, helped prop up the company’s operating ratio, partially offsetting the impact of top line headwinds.

Union Pacific Corp reported a lower quarterly profit on Thursday as a slump in commodities prices and ailing industrial production hurt freight volumes, and the No. 1 US railroad warned that 2016 does not look much better for its business. The shares have declined 35 percent in the past 12 months ended Wednesday.

The Omaha, Nebraska-based company said it had profit of $1.31 per share.

Union Pacific Co. has a 52-week low of $67.06 and a 52-week high of $124.52.

Perhaps most troubling is the rapid and steady decline in Union Pacific’s revenue over the past five quarters. Quarter-over quarter, Union Pacific freight volumes were down 9 percent. On the bright side, core pricing remained strong, increasing 3.5% y/y.

Cowen has issued rating on Union Pacific Corporation in the latest move. Union Pacific ships complete cars as well as auto parts.

“I think we’ll probably see more of this for a couple quarters as Union Pacific tries to align resources with demand”, Purk said.

Regarding the year ahead, Lance Fritz, chairman, president and chief executive officer said, “This past year was a hard one in many respects, but our team did outstanding work in the face of dramatic declines in volumes and shifts in our business mix”.

The next positive is Union Pacific’s continuous strong cash generation ability: In 2015 Union Pacific produced operating cash flows of $7.3 billion (minus 0.5 percent), despite net income being down eight percent over the same time. Union Pacific expects that total volume will be down slightly in 2016. During the quarter, the company bought back 6.6 million shares for $586 million.

Union Pacific Corporation (NYSE:UNP) witnessed a decline in the market cap on Thursday as its shares dropped 3.55% or 2.61 points. In the third quarter, the measure hit a record quarterly low of 60.3 percent. However, he did not mention the exact number of people working in the Omaha headquarters lost their jobs in the last one year. The railroad operator’s revenues for full-year 2015 declined 9.17% on a year-over-year basis to $21.8 billion and were short of the Zacks Consensus Estimate of $22.09 billion. Union Pacific finished the year with about 44,490 workers, down 7 percent from the previous year.