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Union Pacific Corp. reported third-quarter net income of $1.1 billion, or $1.36 per diluted share, compared with $1.3 billion, or $1.50 per diluted share, in the same period a year ago, the Class I announced today. The decline in earnings per share was 9 percent. Operating income fell 11 percent to $2 billion, and operating revenue slipped 7 percent to $5.2 billion compared with third-quarter 2015. The decline in earnings per share was 9 percent.Although UP's earnings missed Wall Street analysts' estimates for the quarter, revenue surpassed expectations. Total revenue carloads fell 6 percent. Although agricultural product shipments rose 11 percent, traffic fell in the railroad's remaining five business groups.As for freight revenue, UP reported a 6 percent increase in agricultural products. Freight revenue declined for chemicals, down 1 percent; automotive, down 8 percent; intermodal, down 9 percent; industrial products, down 13 percent; and coal, down 19 percent. "Continued momentum from our productivity initiatives, as well as positive core pricing, helped partially offset the decline in total carload volumes," said UP Chairman, President and Chief Executive Officer Lance Fritz in a press release.Although the volume challenges have continued during 2016, UP is keeping a "laser focus" on its six value tracks, he said."This strategy ensures we provide our customers with an excellent value proposition and service experience, while efficiently and safely managing our resources," said Fritz.For Q3, UP also reported the following:• Freight revenue decreased 7 percent as volume declines and lower fuel surcharge revenue more than offset core pricing gains;• A 62.1 percent operating ratio, which rose 1.8 points, but improved 3.1 points sequentially;• Quarterly train speed of 26 mph, 2 percent faster than a year ago; and• The repurchase of 9 million shares at an aggregate cost of $851 million.Looking ahead, the macroeconomic environment continues to face challenges, such as an unstable global economy, a relatively strong U.S. dollar and continued soft demand for consumer goods, said Fritz.However, certain segments of the economy, such as grain and energy, are showing signs of life, he added."Closing out 2016 and heading into next year, we are optimistic about the opportunities that lie ahead,” said Fritz. Meanwhile, UP executive Beth Whited will give her perspective on the latest rail industry trends at Progressive Railroading's RailTrends® conference, which will be held Nov. 17-18 at the W Hotel in New York City. Whited, who is scheduled to speak at 2:45 p.m. Nov. 17, is UP's vice president and general manager of chemicals.
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