The Omaha, Neb.-based Class I railway experienced year-over-year declines in net income and revenues for the third quarter of 2016, driven down by lower carload volumes and an especially weak coal segment.
Union Pacific Corporation’s net income for the third quarter of 2016 tumbled 13 percent year-over-year to $1.1 billion, according to the company’s financial statements released Thursday.
The Omaha, Neb.-based Class I railway’s diluted earnings per share for the quarter totaled $1.36 per diluted share, down from $1.50 per diluted share for the third quarter of 2015.
Operating revenues for the quarter fell 7 percent year-over-year to $5.2 billion.
Union Pacific’s third quarter results were hindered by lower carload volumes. The railway’s coal segment was especially sluggish during the quarter.
“Continued momentum from our productivity initiatives, as well as positive core pricing, helped partially offset the decline in total carload volumes,” Union Pacific Chairman, President and CEO Lance Fritz said.
Business volumes, as measured by total revenue car loads, slipped 6 percent year-over-year, as the 11 percent increase in shipments of agricultural products was not enough to offset the declines in the remaining five segments.
Shipments of coal fell 14 percent, while industrial products were down 11 percent, intermodal was down 7 percent, automotive was down 2 percent and chemicals were down 1 percent.
In terms of freight revenues, agricultural products were up 6 percent, but coal was down 19 percent, industrial products were down 13 percent, intermodal was down 9 percent, automotive was down 8 percent and chemicals were down 1 percent.
“The macroeconomic environment still has its challenges – an unstable global economy, the relatively strong U.S. dollar, and continued soft demand for consumer goods. However, certain segments of the economy, such as grain and energy, are showing signs of life,” Fritz said. “Closing out 2016 and heading into next year, we are optimistic about the opportunities that lie ahead. In the coming months we will continue to do what Union Pacific does best – operate a safe, efficient, and productive network while providing an excellent customer experience and delivering solid shareholder returns.”
CSX, which also experienced a drop in coal volumes for the third quarter, saw net earnings for the quarter slip 10 percent year-over-year to $455 million, the Jacksonville, Fla.-based railway said last week.
Kansas City Southern reported this week its net earnings for the quarter slipped 9.1 percent year-over-year to $121 million.
However, Canadian Pacific reported this week it grew net earnings 7.4 percent for the quarter, compared to a year prior, to $347 million Canadian (U.S. $266.4 million), despite lower volumes and revenues.
Meanwhile, Norfolk Southern and Canadian National are scheduled to release their third quarter earnings next week.
Union Pacific’s Q3 net income falls amid lower volumes
