Union Pacific Reports Second Quarter 2023 Results

Union Pacific Corporation (NYSE: UNP) today reported 2023 second quarter net income of $1.6 billion, or $2.57 per diluted share. These results include the previously disclosed $67 million labor expense and $73 million income tax benefit. This compares to 2022 second quarter net income of $1.8 billion, or $2.93 per diluted share. 

“The results this quarter were impacted by softening consumer markets, inflation, a one-time labor expense, and increased workforce levels,” said Lance Fritz, Union Pacific chairman, president, and chief executive officer. “The entire team remains focused on maintaining a solid service product while taking steps to recapture lost productivity and lay a strong foundation for sustainable future success. We took actions throughout the second quarter to drive greater network fluidity and provide our customers with better service. We finished the quarter with resource levels more aligned with demand, as we stored excess locomotives, improved recrew rates, and reduced borrowed-out employees.” 

Financial Results: Core Pricing Gains Offset by Reduced Fuel Surcharge Revenue, Lower Volumes, and an Unfavorable Business Mix  

Second Quarter 2023 Compared to Second Quarter 2022 

• Operating revenue of $6 billion was down 5% driven by reduced fuel surcharge revenue, lower volumes, and an unfavorable business mix, partially offset by core pricing gains. 
• Business volumes, as measured by total revenue carloads, were down 2%. 
• Operating ratio was 63.0%, up 280 basis points. This includes an unfavorable 110 basis point impact from a one-time labor agreement payment and a 200 basis point benefit from falling fuel prices.  
• Operating income of $2.2 billion declined 12%. 

• The company repurchased 600,000 shares in second quarter 2023 at an aggregate cost of $120 million.  

Operating Performance: Improved Service Performance Supported by Larger Crew Base 

Second Quarter 2023 Compared to Second Quarter 2022 

• Quarterly freight car velocity was 202 daily miles per car, an 8% improvement. 
• Quarterly locomotive productivity was 126 gross ton-miles (GTMs) per horsepower day, a 2% improvement. 
• Average maximum train length was 9,316 feet, a 1% decline. 

• Quarterly workforce productivity decreased 5% to 983 car miles per employee. 
• Fuel consumption rate of 1.086, measured in gallons of fuel per thousand GTMs, deteriorated 1%. 
• Union Pacific’s first half reportable derailment rate improved 9% to 2.45 per million train miles compared to 2.68 for 2022. 

2023 Outlook Pressured by Challenging Demand and Cost Environment 

• Consumer-related volumes likely drive full year volume expectations below Industrial Production (Current forecast: +0.1%) 
• Pricing dollars in excess of inflation dollars 
• Forecasting $50 to $70 million in labor expense from new agreements in second half of 2023 
• 2023 Capital Allocation:
  • Capital plan of $3.6 billion  
  • Maintain dividend of $1.30/quarter 
  • No further 2023 share repurchases planned 

Leadership and Board Updates 

In separate press releases issued today, the Company appointed Jim Vena as chief executive officer, named Beth Whited as president, elected Mike McCarthy as chairman and appointed two new independent directors, Doyle Simons, and John Wiehoff, to the Board.  

About Union Pacific

Union Pacific (NYSE: UNP) delivers the goods families and businesses use every day with safe, reliable, and efficient service. Operating in 23 western states, the company connects its customers and communities to the global economy. Trains are the most environmentally responsible way to move freight, helping Union Pacific protect future generations. More information about Union Pacific is available at www.up.com.

Source:  Union Pacific Corporation