Union Pacific's profit grows 9% as the railroad delivers more but results fall short of Wall Street

OMAHA, Neb. -- When labour disputes disrupted operations astatine Canada's 2 largest railroads and ports up and down nan East Coast, galore companies shifted much of their shipments to nan West Coast forcing railroads for illustration Union Pacific and nan ports location to respond quickly.

Union Pacific said Thursday that nan consequence was an unanticipated 33% jump successful nan number of shipping containers filled pinch imports that it delivered successful nan 3rd quarter, which helped thrust a 6% summation successful nan railroad's full measurement and a 9% jump successful profits.

The Omaha, Nebraska-based railroad had to scramble to grip nan further freight by quickly repositioning locomotives and different instrumentality while paying immoderate workers much overtime. Union Pacific and nan L.A./Long Beach ports successful confederate California handled nan surge without important delays successful really quickly ships were unloaded.

“That’s a large jump astatine 1 time. It really is,” CEO Jim Vena said successful an interview. “And I deliberation it shows nan measurement we are managing nan railroad that we cognize we request to person immoderate plus buffers.” For instance, he said nan railroad tries to support astir 500 of its stored locomotives fresh to spell astatine immoderate clip to thief grip unexpected shifts successful shipments.

“I thought nan railroads and nan full proviso concatenation did a awesome job,” Vena said. The different awesome Western railroad, BNSF, would apt besides person seen a large jump successful shipments, but their results won't beryllium nationalist until their genitor company, Warren Buffett's Berkshire Hathaway, reports its net connected Nov. 2.

Even though those intermodal shipments are little profitable than immoderate of nan different equipment Union Pacific hauls, nan further imports flowing into nan West Coast earlier and aft Canada's awesome railroads and nan East Coast ports each concisely unopen down astatine different times helped nan railroad. Union Pacific said it earned $1.67 billion, aliases $2.75 per share. That’s good up of nan $1.53 billion, aliases $2.51 per share, Union Pacific earned a twelvemonth ago, but conscionable down what Wall Street expected.

The analysts surveyed by FactSet Research expected nan railroad to study net per stock of $2.79. Shares remained down astir 5% successful day trading aft nan study was released. Still, Vena was pleased pinch nan results because of nan measurement UP handled nan surge successful measurement while maintaining bully service.

The number of shipments Union Pacific delivered successful nan 4th was mixed crossed different sectors. Intermodal shipments of cargo containers led nan growth. Coal continued its semipermanent decline, but metals, minerals and car shipments were besides down.

The railroad expects its 4th fourth profit will intimately reflector nan 3rd 4th and apical past year’s results. Union Pacific said it sees affirmative momentum successful its profits arsenic its work and ratio and pricing each proceed improving.

Edward Jones expert Jeff Windau said successful a investigation statement that moreover while hauling much less-profitable freight and dealing pinch reduced substance surcharges, Union Pacific managed to amended respective cardinal operating measures. The railroad said freight car velocity and locomotive productivity some accrued 5%.

“Jim Vena, a CEO known for his expertise to thrust performance, should thief nan institution to proceed improving web ratio and productivity, and thrust improvements successful profitability,” Windau wrote.

Union Pacific didn’t make immoderate alteration successful its scheme to repurchase astir $1.5 cardinal of its shares this twelvemonth and put $3.4 cardinal successful superior improvements to its network.

Union Pacific’s expenses declined 2% to $3.68 cardinal arsenic its substance costs dropped 13% successful nan 4th pinch ostentation easing.

Revenue was up 3% astatine $6.09 cardinal — conscionable down nan $6.14 cardinal that analysts had predicted. In further to helping little expenses, nan little substance prices besides wounded gross because nan railroad couldn't cod arsenic overmuch successful substance surcharges from its customers. But Union Pacific kept moving to raise rates capable to much than offset inflation.

Union Pacific is 1 of nan nation’s largest railroads pinch tracks crossing 23 occidental states.