Union Pacific Reports Mixed Q2 Results, Projects Uncertain Volume Outlook For Second Half

Union Pacific Corporation UNP reported second-quarter 2024 operating revenue of $6.01 billion, missing the consensus of $6.06 billion.

Operating revenue was up 1% year over year, driven by core pricing gains and increased volume, partially offset by business mix and reduced fuel surcharge.

Freight revenue was $5.638 billion, with Bulk -2% YoY, Industrial +2%, and Premium +4%. Excluding fuel surcharge, Freight revenue grew 2% as revenue carloads grew slightly.

EPS was $2.74 (+7% Y/Y), beating the consensus of $2.72.

The operating ratio was 60%, up 300 basis points YoY. Operating income increased 9% to $2.4 billion, driven by core pricing gains, operating efficiency, and intermodal equipment sale.

Union Pacific reported second-quarter freight car velocity of 201 daily miles per car, flat YoY, and locomotive productivity of 134 gross ton-miles (GTMs) per horsepower day, a 6% improvement.

Average fuel price per gallon consumed declined by 5% Y/Y to $2.73.

Union Pacific’s quarterly workforce productivity improved by 5 % to 1,031 car miles per employee.

Union Pacific’s operating cash flow year-to-date totaled $4.03 billion, up from $3.86 billion a year ago. Free cash flow was $853 million.

Last week, Union Pacific Board voted to increase the quarterly dividend on the common shares by 3% to $1.34 per share. The dividend is payable September 30 to shareholders of record August 30.

2024 Outlook: Union Pacific anticipates an uncertain second-half volume outlook due to economic indicators and coal demand but remains optimistic about profitability with strong service, improved network efficiency, and solid pricing.

The company plans to repurchase approximately $1.5 billion in shares in 2024. The company anticipates a capital plan of $3.4 billion.

Price Action: UNP shares are trading lower by 0.41% at $236.40 at the last check Thursday.

Image: Courtesy of Union Pacific Corporation