Union Pacific’s net profit for the third quarter of 2023 slipped 19% amid a 10% drop in overall revenues, the Western U.S. Class I railroad said Thursday morning.
Third-quarter 2023 net income was $1.53 billion, or $2.51 per diluted share, compared with nearly $1.9 billion, or $3.05 per diluted share, for the third quarter of 2022.
“We faced many challenges in the quarter, including continued inflationary pressures and a drop in carloads,” UP CEO Jim Vena said in Thursday’s earnings release. “Operationally we gained momentum through the quarter, which positions us to provide our customers with great service. Operating and safety metrics are showing solid improvement, as we increase asset utilization. We are aligning the team around our strategy focused on being the best in safety, service, and operational excellence as we drive growth to the railroad. Through our day-to-day actions, we will continue to make improvements as we exit the year.”
Overall operating revenue was $5.9 billion, down 10% year-over-year (y/y). Of that, freight revenue totaled $5.5 billion, which is a 9% decrease compared with the same period in 2022.
UP (NYSE: UNP) said revenue was lower amid reduced fuel surcharge revenue, lower volumes and business mix, but those were partially offset by core pricing gains. Total revenue carloads slipped 3% y/y.
However, UP reduced operating expenses by 4% in the third quarter to $3.76 billion amid a 25% decrease in fuel expenses and a 6% decrease in compensation and benefits.
Operating income was $2.18 billion in the third quarter, down 17% y/y. Operating ratio, a metric that investors sometimes use to gauge the financial health of a company, rose from 59.9% to 63.4% A lower OR can imply improved financial health.
Average train length grew 1% to 9,537 feet, while quarterly freight car velocity was 200 daily miles per car, which is “a 5% improvement,” UP said.
UP said its full-year outlook for 2023 “remains relatively unchanged,” with “year-to-date softness in consumer-related volumes likely [to] drive full year volume expectations below industrial production.”
Vena said in UP’s Inside Track newsletter, published Thursday, “Team UP, we are making progress to be the best at Safety, Service and Operational Excellence. We closed the third quarter with clearly identified areas we have to improve. We are working to improve safety. We are also moving faster, being more efficient, productive and responsive to our customers and all stakeholders. September alone had some of the best service performance metrics we’ve seen in a while.”
Subscribe to FreightWaves’ e-newsletters and get the latest insights on freight right in your inbox.
Click here for more FreightWaves articles by Joanna Marsh.
Related links:
Brokerage Compliance Symposium
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
F3 Awards Dinner
The night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowThe night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now