UP revenue, earnings fall in Q3, but operating ratio improves

Union Pacific Railroad today reported third-quarter 2020 net income decreased 12% to $1.4 billion, or $2.01 per diluted share, from $1.6 billion, or $2.22 per diluted share, in the same quarter last year.

Operating revenue in the quarter fell 11% to $4.9 billion from a year ago. Third-quarter business volumes, as measured by total revenue carloads, decreased 4%. Premium volumes increased compared to Q3 2019, while industrial and bulk declined, UP officials said in a press release.

UP's third-quarter results represent another step in the company's "transformation," said Chairman, President and Chief Executive Lance Fritz.

"We demonstrated our ability to efficiently adjust to a sharp rebound in volume, which increased 19% from the second quarter, while operating expenses, excluding fuel price changes, increased only 11% sequentially," Fritz said.

Also in Q3 2020 versus Q3 2019, UP's:
• freight revenue declined 11%, as core pricing gains were more than offset by lower volumes, a less favorable business mix and decreased fuel surcharge revenue;
• 58.7% operating ratio, an all-time quarterly record, improved 0.8 points;
• freight-car velocity was 220 daily miles per car, a 3% improvement;
• quarterly locomotive productivity was 138 gross ton-miles per horsepower day, an all-time record and 11% improvement;
• average maximum train length was 8,984 feet, a 13% increase.

"The results we are delivering, both operationally and financially, deepen our conviction that the changes we're making to transform our railroad are on target and on track," said Fritz. "An improved customer experience, coupled with a lower cost structure, is opening up new markets and opportunities to grow our business as we win win with customers and convert more freight to rail."