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Union Pacific Railroad today reported revenue growth drove first-quarter records for operating revenue, operating income, net income and earnings per share.
The Class I posted first-quarter 2022 net income of $1.6 billion, or $2.57 per diluted share, compared with net income of $1.3 billion, or $2 per diluted share, in the same quarter a year ago.
UP's operating revenue of $5.9 billion rose 17% driven by fuel surcharge revenue, volume growth, core pricing gains and a positive business mix. Operating income jumped 19% to $2.4 billion for the quarter.
Business volumes, as measured by total revenue carloads, climbed 4%. UP reported an operating ratio of 59.4% for the quarter, an improvement from 60.1% posted a year ago. The Q1 OR included 160 basis points of positive impact from 2021 weather events. Higher fuel prices negatively impacted the operating ratio by 80 basis points, UP officials said.
Also during the quarter, UP repurchased 11 million shares at an aggregate cost of $2.8 billion.
"Union Pacific translated revenue growth from a strong economy, our focused business development initiatives, core pricing gains and positive business mix into solid financial results," said UP Chairman, President and CEO Lance Fritz in a press release.
Operationally, UP did not meet expectations, which is having an impact on the railroad's customers, Fritz added.
"We are taking actions to improve resource utilization, increase crews and locomotives where needed and reduce freight car inventory levels to restore fluidity," he said.
Inefficiencies and incidents impacted service and productivity in Q1 2022 compared to Q1 2021, company officials said. UP's Q1 operating performance included:• freight car velocity of 198 daily miles per car, a 5% decline;• locomotive productivity of 130 gross ton-miles (GTMs) per horsepower day, a 6% decline;• a flat average maximum train length;• workforce productivity of 1,056 car miles per employee, a 5% improvement; and• a flat fuel consumption rate, measured in gallons of fuel per thousand GTMs.