CEO Lance Fritz credits “strong volume growth, core pricing gains and regaining positive productivity momentum.”
Union Pacific Corp. on Thursday reported record fourth quarter 2018 net income of $1.6 billion, or $2.12 per diluted share, which represents 29 and 39 percent increases, respectively, when compared to adjusted results for the fourth quarter of 2017.
Reported fourth quarter 2017 results include previously disclosed adjustments reflecting the impact of corporate tax reform. Including those items, fourth quarter 2017 reported net income was $7.3 billion, or $9.25 per diluted share, Union Pacific said.
“We reported record earnings for the quarter driven by strong volume growth, core pricing gains and regaining positive productivity momentum,” said Lance Fritz, Union Pacific chairman, president and chief executive officer. “Building on this progress, we are advancing the implementation schedule for Unified Plan 2020.
“Since starting this initiative in October, we have improved on-time service for our customers while at the same time eliminating excess costs and improving the utilization of network resources,” Fritz said.
Operating revenue of $5.8 billion was up 6 percent in the fourth quarter year-over-year, Union Pacific said, adding that Q4 business volumes, as measured by total revenue carloads, increased 3 percent compared to 2017.
Union Pacific said strong growth in industrial and premium shipments more than offset declines in agricultural products and energy.
In its Q4 report, Union Pacific said:
• Quarterly freight revenue increased 6 percent compared to the fourth quarter 2017, as positive volume, increased fuel surcharge revenue and core pricing gains all contributed to the increase, but were partially offset by negative business mix.
• Operating ratio of 61.6 percent improved 1.1 points compared to adjusted fourth quarter 2017.
• The $2.33 per gallon average quarterly diesel fuel price in the fourth quarter 2018 was 15 percent higher than the fourth quarter 2017.
• Quarterly train speed, as reported to the Association of American Railroads, was 24.4 mph, 3 percent slower than the fourth quarter 2017.
• Terminal dwell was 26.7 hours, an 18 percent improvement compared to the fourth quarter 2017.
• The railroad repurchased 8 million shares in the fourth quarter 2018 at an aggregate cost of $1.2 billion. Union Pacific also received 4.5 million shares to complete a $3.6 billion accelerated share repurchase program initiated in June.
For the full year 2018, Union Pacific reported record net income of $6 billion or $7.91 per diluted share, which represents 29 and 37 percent increases, respectively, when compared to adjusted results for 2017.
Operating revenue totaled $22.8 billion compared to $21.2 billion in 2017. Operating income totaled $8.5 billion, an 8 percent increase compared to adjusted 2017, Union Pacific said.
In addition:
• Freight revenue totaled $21.4 billion, an 8 percent increase compared to 2017. Car loadings were up 4 percent versus 2017, led by strong growth in industrial and premium shipments.
• Average diesel fuel prices increased 27 percent to $2.29 per gallon in 2018 from $1.81 per gallon in 2017.
• Union Pacific’s operating ratio improved to 62.7 percent, 0.1 points lower than adjusted 2017.
• Train speed, as reported to the Association of American Railroads, was 24.5 mph, 4 percent slower than full year 2017.
• Terminal dwell was 29.6 hours, a 2 percent improvement compared to full year 2017.
• Union Pacific’s reportable personal injury rate of 0.82 incidents per 200,000 employee hours increased 4 percent compared to the full year 2017.
• The railroad’s capital program in 2018 totaled $3.2 billion.
• Union Pacific repurchased 57.2 million shares in 2018 at an aggregate cost of $8.2 billion, which includes 24.3 million shares associated with a $3.6 billion accelerated share repurchase program initiated in June and completed in the fourth quarter.
“We are optimistic that continued economic growth, improving service performance and the strength of our diverse franchise will drive positive volume and revenue growth in 2019,” Fritz said. “We expect operating margins will increase as a result of solid core pricing gains and significant productivity benefits from our G55 + 0 initiatives, including Unified Plan 2020.”
Union Pacific reports record Q4, full-year net income
