Union Pacific Profit Falls 19% as Demand Remains Under Pressure

By Tess Stynes 

Union Pacific Corp. said its second-quarter earnings fell 19% as freight demand remains pressured, a trend the railroad operator expects to continue throughout the second half of the year.

For the three months ended June 30, Union Pacific's total freight volume fell 11% as a 2% increase in shipments of agricultural products was offset by declines in volume for other commodities. Coal volume slumped 21% and industrial products volume dropped 11%. Volume in its intermodal business -- which moves freight using a combination of trains and trucks -- fell 14%.

Freight revenue dropped 13% as weaker freight volume and fuel surcharge revenue more than offset higher core pricing.

Chief Executive Lance Fritz said in prepared remarks Thursday that freight volume is expected to remain under pressure through the second half of the year, citing the negative impact of the strong U.S. dollar on exports and relatively weak demand for consumer goods.

During April, Union Pacific said it expected total volumes for the year to decline in the mid-single digits.

Over all, Union Pacific reported a profit of $979 million, or $1.17 a share, down from $1.2 billion, or $1.38 a share, a year earlier. Revenue decreased 12% to $4.77 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.17 and revenue of $4.8 billion.

Operating ratio rose 1.1 percentage point to 65.2%.

Shares fell 2.3% to $92 in recent premarket trading.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

July 21, 2016 09:04 ET (13:04 GMT)

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