UP reports 29 percent growth in Q2 net income

Union Pacific Railroad today reported second-quarter net income jumped 29 percent to $1.51 billion, or $1.98 per share, from $1.2 billion, or $1.45 per share, in the same quarter a year ago.

Operating income for the quarter rose 5 percent to $2.1 billion and operating revenue climbed 8 percent to $5.7 billion compared with second-quarter 2017, according to a UP press release.

"Overall, I am pleased with the effort put forth by the entire Union Pacific team; however, I recognize the results could have been better," said Chairman, President and Chief Executive Officer Lance Fritz. "Network performance improved significantly coming out of the first quarter, but a tunnel outage and train-crew shortages created a headwind in June. I am confident we have the right plans in place to drive improvement in our operations and a better service experience for our customers."

Second-quarter carloads rose 4 percent over the same period a year ago. Volume increases in the industrial and premium (intermodal and automotive) categories more than offset declines in agricultural products and energy, UP officials said.

In addition, UP reported:
• Quarterly freight revenue improved 8 percent compared to the second quarter 2017, as volume growth, increased fuel surcharge revenue, and core pricing gains were partially offset by negative mix of traffic.
• The $2.30 per gallon average quarterly diesel fuel price in the second quarter 2018 was 36 percent higher than the second quarter 2017.
• Quarterly train speed, as reported to the Association of American Railroads, was 24.7 mph, 3 percent slower than the second quarter 2017.
• UP's first-half reportable personal injury rate of 0.76 per 200,000 employee hours was flat compared to the first half of 2017.

Year over year, second-quarter freight revenue increased in agricultural products (5 percent), energy (5 percent), industrial (8 percent) and premium (14 percent).

The Class I's operating ratio in Q2 2018 increased 1.1 points to 63 percent compared with the operating ratio in second-quarter 2017. In a footnote, the company stated that certain prior period amounts have been adjusted due to an update in accounting standards related to periodic pension and other post-retirement benefit costs.

"Looking to the remainder of the year, we expect the strong business environment to continue as we regain our productivity momentum and improve the value proposition for all of our stakeholders," Fritz said.