Union Pacific reports 7% gain in Q4 net income

Union Pacific Corp. today reported fourth-quarter 2024 net income of $1.8 billion, or $2.91 per diluted share, a 7% increase compared with third-quarter 2023 net income of $1.7 billion, or $2.71 per diluted share.

The Q4 net income results include $40 million in labor expenses related to the ratification of a crew staffing agreement, UP officials said in a press release.

Reported income for full-year 2024 was $6.7 billion, or $11.09 per diluted share, compared to full-year 2023 net income of $6.4 billion, or $10.45 per diluted share. UP posted a Q4 operating ratio of 58.7% compared to 60.9% in the same period a year ago.

The Class I achieved Q4 operating revenue of $6.1 billion, a 1% decrease driven by lower fuel surcharge revenue, unfavorable business mix and lower other revenue, partially offset by increased volume and core pricing gains. Operating income for the quarter was $2.5 billion, a 5% year-over-year increase.

In terms of Q4 operating performance, UP reported the following:
• Freight car velocity improved 1% to 219 daily miles per car;
• Locomotive productivity declined 3% to 136 gross ton-miles (GTMs) per horsepower day;
• Workforce productivity increased 6% to 1,118 car miles per employee; and
• Fuel consumption rate improved 1% to 1.078, measured in gallons of fuel per thousand GTMs.

"Our strong fourth-quarter results represent a great capstone to a very successful year for Union Pacific,” said CEO Jim Vena. "The team has fully embraced our strategy to lead the industry in safety, service, and operational excellence. That commitment has produced industry leading financial results in 2024, punctuated by our strong finish to the year. We will carry this momentum into 2025 as we seek to unlock the full potential of the UP franchise.”

Looking ahead to 2025, UP officials said the company is on track with the targets announced during the 2024 Investor Day in September 2024: Volume will be impacted by mixed economic backdrop, coal demand and challenging year-over-year international intermodal comparisons; earnings per share growth consistent with attaining the three-year compound annual growth rate target of high-single to low-double digit; and "industry-leading" OR and return on invested capital.

UP expects no changes to its long-term capital allocation strategy and set a 2025 capital spending plan of $3.4 billion. The Class I previously budgeted capex at $3.4 billion in 2024 and $3.7 billion in 2023. The 2025 budget includes $1.9 billion for infrastructure replacement work; $600 million for capacity expansion and commercial facilities; $500 million for locomotives and freight cars; and $400 million for technology and other expenses.