Union Pacific (UNP, Financial), a major player in U.S. rail freight services, announced its financial results for the third quarter of 2024. The company reported a 3% year-over-year increase in revenue to $6.09 billion, which fell short of analysts' expectations of $6.14 billion. Net income rose 9% to $1.671 billion, and diluted earnings per share were $2.75, slightly below the expected $2.78.
The revenue growth was primarily driven by increased volume and core pricing benefits, although it was partially offset by changes in business mix and decreased fuel surcharge revenue. Excluding fuel surcharge revenue, freight revenue rose by 5%, with a 6% increase in freight volume.
Operating profit surged by 11% to $2.416 billion, and the operating ratio improved by 310 basis points to 60.3%, aided by lower fuel prices accounting for a 120 basis point positive impact.
Looking ahead, Union Pacific expects its fourth-quarter performance to remain consistent with the third quarter, with an improvement over the previous year. The company remains optimistic about its earnings prospects, citing strong service offerings, enhanced network efficiency, and robust pricing. It also plans to repurchase $1.5 billion in stock for 2024 and maintains a capital plan of approximately $3.4 billion.
As of the latest update, Union Pacific's shares dropped nearly 4% in premarket trading.
