Union Pacific 2Q Profit Declines, As Pandemic Holds Back Demand

By Micah Maidenberg

Union Pacific Corp. reported a weaker second-quarter profit, reflecting how demand for shipments across the company's business lines fell off amid coronavirus-related shutdowns earlier this year.

Union Pacific said earnings dropped to $1.13 billion, or $1.67 a share, from $1.57 billion, or $2.22 a share, for the second quarter last year. Profit on a per-share basis topped expectations from analysts, according to FactSet.

The Omaha, Neb.-based railroad said quarterly volume dropped by 20% year over year. It warned that for the year, it believes carload volumes will be down roughly 10%.

"Volumes for all three business teams - bulk, industrial and premium - declined in the quarter due to the deteriorating economic conditions brought on by the Covid-19 pandemic," the company said.

CSX Corp. and Canadian Pacific Railway Ltd. Wednesday said they also struggled with falling volumes and reported weaker earnings for the second quarter.

Union Pacific reported revenue of $4.24 billion, down 24% compared with last year and weaker than forecast from analysts, who predicted the company would generate more than $4.39 billion in revenue.

Cost cuts helped the company grapple with the weakness in demand. Operating expenses were down 22% overall. Employee compensation dropped 21% and fuel costs fell 56%, Union Pacific said.

The company recognized a $69 million gain from a real-estate sale to the Illinois State Toll Highway Authority. That deal added seven cents a share to profit for the quarter.

Write to Micah Maidenberg at [e-mail]

(END) Dow Jones Newswires

July 23, 2020 08:37 ET (12:37 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.