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Union Pacific Corp.'s 6 percent decline in business volumes drove down profit in the third quarter, but the company also achieved a quarterly record operating ratio, the Class I reported this morning. Third-quarter 2015 net income fell to $1.3 billion, or $1.50 per diluted share, compared with $1.4 billion, or $1.53 per diluted share, in third-quarter 2014. Operating income was $2.2 billion, down 5 percent; operating revenue was $5.6 billion, down 10 percent compared with the year-ago period, UP officials said in a press release."Total volumes decreased about 6 percent in the quarter, more than offsetting another quarter of solid core pricing gains," said Lance Fritz, Union Pacific chairman, president and chief executive officer. "On the cost side, we've made significant progress aligning our resources to current demand, and I am pleased to report a quarterly record operating ratio of 60.3 percent."Total freight revenue fell by 10 percent. Business volumes, as measured by total revenue carloads, declined in every business group except automotive, which was flat. By freight category: agricultural products were down 4 percent; chemicals, down 6 percent; intermodal, down 11 percent; industrial products, down 16 percent; and coal, down 18 percent.Also during the Q3:• Lower fuel prices helped UP achieve the 60.3 percent operating ratio, which was a 2-point improvement over third-quarter 2014 and 1.1 points better than the previous quarterly record set in fourth-quarter 2014.• The $1.81 per gallon average quarterly diesel fuel price was 40 percent lower than in third-quarter 2014.• Quarterly train speed was 25.6 mph, 8 percent faster than the year-ago period.• The company repurchased 13.8 million shares during the quarter at an aggregate cost of more than $1.2 billion.Fritz said the company made progress while confronting the year's challenges."As we finish 2015 and head toward next year, we continue to face many uncertainties," he said. "Energy prices, the consumer economy, grain markets and the strength of the U.S. dollar will all be key to future demand. Over the long term, we are well positioned to safely provide our customers with excellent service, while delivering strong value to our shareholders."
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