UP's Q1 revenue, profit fall as volumes continue to slow
Union Pacific Railroad logged first-quarter net income of $979 million, or $1.16 per diluted share, compared with $1.15 billion, or $1.30 per diluted share, in the previous year's quarter, the Class I reported this morning. Operating revenue of $4.8 billion was down 14 percent compared with first-quarter 2015, as the railroad faced declining carloads in many of its business lines, UP officials said in a press release. UP's Q1 earnings per share of $1.16 was down 11 percent, but it beat analysts' estimates of $1.10. Operating income for the quarter declined 15 percent to $1.7 billion compared with a year ago. UP's operating ratio came in at 65.1 percent, up 0.3 points from first-quarter 2015. First-quarter volumes as measured by total revenue carloads fell 8 percent compared with volumes in Q1 2015. Declines in coal, industrial products, agricultural products and intermodal more than offset growth in automotive traffic. Chemical volumes were flat compared with last year's traffic, as declines in crude oil and fertilizer traffic offset growth in other chemical shipments. Freight revenue for the quarter was down 14 percent compared with 2015's first quarter, as volume declines, lower fuel surcharge revenue and a negative business mix offset core pricing gains. UP posted freight revenue declines in automotive, down 1 percent; chemicals, down 2 percent; agricultural products, down 6 percent; intermodal, down 9 percent; industrial products, down 18 percent; and coal, down 43 percent compared with a year ago. Many of the same trends the company faced throughout 2015 are continuing this year, said UP Chairman, President and Chief Executive Officer Lance Fritz in a prepared statement. "An energy market recession, low commodity prices, the strength of the U.S. dollar in a soft global economy, and muted domestic retail demand all contributed to market weakness across many of our business lines," Fritz said. "Despite the current challenges, we will continue to adapt to new business environments, drive productivity and innovation, and improve our industry leading safety performance as we work toward our ultimate goal of zero incidents."