Union Pacific's (UNP) Q2 Highlights: Earnings Beat, Limited Carloadings, Cost Pressure & More - Union Pacific (NYSE:UNP)

Union Pacific Corp UNP reported second-quarter operating revenue growth of 14% year-over-year to $6.30 billion, above the consensus of $6.12 billion.
The revenue increase was driven by higher fuel surcharge revenue, volume growth, core pricing gains, and a positive business mix offset slightly by volume declines.
Freight revenues increased by 14% Y/Y to $5.84 billion, with Bulk +10%, Industrial +12%, and Premium +19%.
As measured by total revenue carloads, business volumes were down 1%.
EPS of $2.93 topped the consensus of $2.83.
Operating expenses increased by 25% Y/Y to $3.77 billion, and the operating ratio was 60%, deteriorating by 510 bps.
Operating income increased by 1% Y/Y to $2.49 billion, and margin contracted by 513 bps to 39.8%.
The company reported Q2 freight car velocity of 187 daily miles per car, a 12% decline; locomotive productivity of 123 gross ton-miles (GTMs) per horsepower day, a 12% decline.
Lance Fritz, Union Pacific chairman & CEO, said, "As anticipated, the Second Quarter was a tough one as we limited carloadings and increased expenses to recover network fluidity."
"We also experienced record high fuel prices and increasing inflation, adding pressure to our total costs," he added.
Union Pacific generated cash from operating activities year-to-date of $4.17 billion versus $4.22 billion a year ago. Free cash flow was $1.07 billion.
The company repurchased 3.1 million shares in Q2 at an aggregate cost of $722 million.
FY22 Guidance: UNP noted that 1H22 results challenge previous full-year volume and operating ratio targets.
UNP expects second-half volumes to produce full-year carload growth of 4% to 5%.
It sees a full-year operating ratio of around 58% (prior view around ~55%). It sees 2H operating ratio improvement vs. 2021 and 2H incremental margins around 50%.
Price Action: UNP shares traded lower by 1.88% at $210.41 on the last check Thursday.

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Union Pacific's Q2 Highlights: Earnings Beat, Limited Carloadings, Cost Pressure & More

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