OMAHA, Neb. (AP) — Union Pacific’s first-quarter profit declined 9% as the railroad delivered less freight and its revenue fell, but it said the economy is steadily improving.
The Omaha, Nebraska-based company said Thursday that it earned $1.34 billion, or $2 per share, in the quarter. That’s down from $1.47 billion, or $2.15 per share, a year earlier.
The results did not meet Wall Street expectations as it delivered 1% less freight and had to deal with the severe cold in February. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $2.06 per share. The railroad estimated that costs related to the weather weighed down its results by 16 cents per share.
Union Pacific’s revenue fell 4% to $5 billion in the period, which fell short of the $5.04 billion that analysts expected as coal and industrial revenue were weak.
The railroad said it expects shipping volume to grow roughly 6% overall in 2021 as the economy continues to recover from the coronavirus pandemic and industrial production increases.
“Union Pacific is poised to take advantage of a strengthening economy,” CEO Lance Fritz said.
Citi research analyst Christian Wetherbee said Union Pacific’s performance was clearly hurt by the weather and higher fuel costs during the quarter, but its outlook suggests the economy will continue improving.
Union Pacific Corp. said it cut its expenses 3% in the quarter to $3 billion as it worked to improve productivity along the railroad.
With both the Canadian Pacific and Canadian National railroads trying to acquire Kansas City Southern railroad, Fritz said he is concerned that either deal might hurt competition if it restricts access to customers Union Pacific currently serves. He said regulators at the Surface Transportation Board should scrutinize those proposed deals involving some of the large Class I railroads carefully.
“What we are focused on is what the STB says the next Class I merger must provide and that is an enhancement to competition and clear improvement for all customers. For that to be true in any transaction, our current service product has to remain intact,” Fritz said. “Our concern is making sure we have good operational and commercial access to all the customers that we serve currently in Mexico and in other parts whether they are near or on the CP railroad or the CN railroad.”
Union Pacific shares have climbed slightly more than 7% since the beginning of the year, while the S&P’s 500 index has risen 11%. The stock has risen 55% in the last 12 months.
Union Pacific is one of the nation’s largest railroads, and it operates 32,400 miles (52,000 kilometers) of track in 23 Western states.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNP at https://www.zacks.com/ap/UNP