Union Pacific's Volume Growth Offset By Fuel Costs, Unfavorable Business Mix

Union Pacific Corporation UNP shares are trading lower after the company reported worse-than-expected first-quarter 2025 results.

Union Pacific reported operating revenue of $6.027 billion, flat year-over-year, missing the consensus of $6.08 billion.

Despite 7% volume growth and strong core pricing, operating revenue stayed flat due to headwinds from the business mix, lower fuel surcharges, and leap-year impact.

Freight revenue was $5.691 billion, with Bulk up 1 % year over year, Industrial down 1%, and Premium up 5%. Revenue carloads were up 7%.

Earnings per share were $2.70 compared to $2.69 a year ago, below the consensus of $2.75.

The operating ratio held steady at 60.7%, as pricing gains offset a 90 bps drag from fuel and the leap year. Operating expenses remained flat, driven by productivity gains, and operating income was unchanged at $2.37 billion.

Union Pacific reported a first-quarter freight car velocity of 215 daily miles per car, +6% YoY, and a locomotive productivity of 136 gross ton-miles (GTMs) per horsepower day, which was a 1% improvement.

The average fuel price per gallon consumed declined by 11% year over year to $2.51. Union Pacific's quarterly workforce productivity improved by 9% to 1,091 car miles per employee.

Union Pacific's operating cash flow for the quarter totaled $2.21 billion, up from $2.12 billion a year ago. Free cash flow was $468 million.

"The team delivered a solid start to the year as we worked closely with our customers to meet their needs in an uncertain environment. Looking to the rest of 2025, we will continue to execute our strategy that emphasizes safety, service, and operational excellence. Building on a strong foundation with our record First Quarter operating performance, we are positioned to deliver," commented Jim Vena, Union Pacific’s Chief Executive Officer.

2025 Outlook affirmed: Union Pacific mentioned that volume faces pressure from the economic backdrop, coal demand, and challenging year-over-year international intermodal comparisons.

Pricing continues to support the operating ratio, and EPS growth aligns with the 3-year CAGR goal of high single digits to low double digits.

The company reaffirms its long-term strategy with a $3.4 billion capital plan, $4.0–$4.5 billion in share repurchases, and a focus on industry-leading efficiency and returns.

Price Action: Union Pacific shares are trading lower by 3.77% at $211.50 at the last check Thursday.

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