Railroad Franchise Union Pacific On The Right Track? Exceeds Q4 Expectations But Warns On Muted Volume Outlook

Union Pacific Corporation UNP reported a fourth-quarter FY23 operating revenue of $6.159 billion, beating the consensus of $6.05 billion.

Operating revenue was flat, driven by increased volume and core pricing gains offset by reduced fuel surcharge revenue and business mix.

Freight revenues increased 1% Y/Y to $5.801 billion, with Bulk flat YoY, Industrial +4%, and Premium -3%.

EPS was $2.71 (+1% Y/Y), beating the consensus of $2.57.

The operating ratio was 60.9%, up 10 basis points YoY. Operating income declined was flat at $2.4 billion.

The company reported Q4 freight car velocity of 217 daily miles per car, an improvement of 14%, and locomotive productivity of 140 gross ton-miles (GTMs) per horsepower day, a 14% improvement.

Average fuel price per gallon consumed declined by 15% Y/Y to $3.16.

Union Pacific’s Q4 quarterly workforce productivity improved by 4% to 1,051 car miles per employee.

Union Pacific generated operating cash flow for the fiscal of $8.38 billion versus $9.36 billion a year ago. Free cash flow was $1.54 billion.

2024 Outlook: Union Pacific said its volume outlook muted by international intermodal business loss, lower coal demand, and soft economic conditions. The company anticipates capital plan of $3.4 billion.

Also Read: Rails Back On Track: Analyst Upgrades Union Pacific And Norfolk Southern, Predicts Strong Intermodal Recovery

Price Action: UNP shares are trading lower by 0.54% at $241.02 on the last check Thursday.

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