Union Pacific 4Q profit slips 4% on weather, hiring problems

Jan 23, 2023, 4:12 PM | Updated: Jan 24, 2023, 11:54 am
FILE - A Union Pacific train engine sits in a rail yard on Wednesday, Sept. 14, 2022, in Commerce, ...

FILE - A Union Pacific train engine sits in a rail yard on Wednesday, Sept. 14, 2022, in Commerce, Calif. Union Pacific reports earnings on Tuesday, Jan. 24, 2023 (AP Photo/Ashley Landis, File)

(AP Photo/Ashley Landis, File)

OMAHA, Neb. (AP) — Union Pacific’s fourth-quarter profit slipped 4% as severe winter weather snarled shipments in late December and disrupted the railroad’s efforts to eliminate the delayed deliveries and other problems shippers complained about last year.

The Omaha, Nebraska-based railroad said it earned $1.6 billion, or $2.67 per share, in the fourth quarter. That’s down from $1.7 billion, or $2.66 per share, a year ago.

Union Pacific said its revenue grew 8% to $6.2 billion in the quarter as it increased prices, charged more fuel surcharges and delivered 1% more freight, but its expenses were up 14% at $3.8 billion.

UP Chairman and CEO Lance Fritz said the “revenue growth was more than offset by elevated operating expenses from operational inefficiencies and a higher inflationary environment.”

The results did not meet Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $2.75 per share. UP’s share price were down nearly 3% at $204.39 in afternoon trading.

Most key performance measures deteriorated during the quarter as the railroad continued to have a hard time hiring enough employees in key locations. The railroad’s average headcount is up 4% at 31,120 as it has been hiring throughout the past year, but it still needs more crews and maintenance workers in certain locations. Executives said about 600 additional workers are currently in training.

Union Pacific said freight car velocity declined 3% to 191 daily miles per car and locomotive productivity was down 5% during the quarter.

But Fritz said performance has improved in January and freight car velocity is now up around 210 daily miles per car. “Right now we’re operating pretty fluidly,” he said.

Edward Jones analyst Jeff Windau said he anticipated the ongoing hiring challenges and pressure from fuel costs that were up 43%. The weather impact was the surprise in the results. Going forward, the staffing situation should improve as UP hires and trains more workers and fuel prices will likely ease.

Investment manager Louis Navellier, who holds UP stock in his funds, said fuel costs clearly hurt the railroad’s bottom line. He said he had hoped the railroads might be able to pick up additional grain volume because the low water levels on the Mississippi River last fall limited how much barges could handle, but it looks like the railroad didn’t have much capacity to take on that business.

Heading into 2023, the railroad said it still expects shipping volume to grow faster than industrial production, but the current forecast calls for industrial production to be down by half a percent this year amid recession fears. UP executives said the economy remains too uncertain to predict how much volume might grow this year.

Fritz said he expects the railroad’s performance to continue improving in 2023. The key now is demonstrating to shippers that UP can regular deliver their cargo on a more regular schedule. Just last month, federal regulators ordered the railroad to prioritize grain deliveries to Foster Farms in California to ensure it had enough feed for the millions of chickens and hundreds of thousands of cattle it takes care of. Foster Farms said the dire situation had improved by mid January.

“Our job is to demonstrate to our customers that we are reliable. That this level of service — you know we’re still going to have some things happen. It’s an outdoor factory — but that we snap back quickly from whatever those events are and we are highly reliable,” Fritz said.

Union Pacific will also be working this year to find ways to address some of the quality-of-life concerns workers expressed during last fall’s contract fight about the demanding schedules they face and the lack of paid sick time.

Even with the service problems last year, the railroad said its 2022 profit was up 7% to nearly $7 billion, or $11.21 per share, from $6.5 billion, or $9.95 per share, the year before.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Italian Prime Minister Giorgia Meloni departs Algiers after a two day official visit in Algeria, Mo...
Associated Press

Italy’s premier visits Libya for talks on energy, migration

CAIRO (AP) — Italy’s prime minister arrived in Libya on Saturday for talks with officials from the country’s west-based government that will focus on energy and migration, top issues for Italy and the European Union. Libya is the third North African country that Prime Minister Giorgia Meloni has visited over the last two weeks as […]
1 day ago
FILE  - A view of a Flybe flight departing from Manchester Airport, Manchester, England, Jan. 13, 2...
Associated Press

Flights canceled as UK airline Flybe sinks into bankruptcy

LONDON (AP) — Struggling U.K. regional airline Flybe collapsed for the second time in three years Saturday, putting jobs on the line and leaving passengers stranded. The airline initially slumped into bankruptcy in March 2020, shedding 2,400 jobs, as coronavirus restrictions decimated the travel industry. It relaunched in April last year, flying many of the […]
1 day ago
Presidential candidate and retired army Gen. Petr Pavel leaves the polling station after casting hi...
Associated Press

Czechs select successor to Milos Zeman in president runoff

PRAGUE (AP) — Czech voters were casting ballots on the second day of a presidential runoff election on Saturday, picking a successor to Milos Zeman in the largely ceremonial post. Retired army Gen. Petr Pavel and populist billionaire Andrej Babis, advanced to a second round of voting because none of the eight initial candidates received […]
1 day ago
A picture made available by Gucci press office Saturday, Jan. 28, 2023, showing Sabato De Sarno who...
Associated Press

Sabato De Sarno named new Gucci creative director

MILAN (AP) — Italian designer Sabato De Sarno has been named the new creative director of Gucci, and will unveil his first collection during Milan Fashion Week next September, Gucci and parent company Kering announced Saturday. De Sarno has previously worked for Prada, Dolce & Gabbana and Valentino, where he was most recently fashion director […]
1 day ago
FILE - Sri Lankan President Ranil Wickremesinghe speaks at the COP27 U.N. Climate Summit in Sharm e...
Associated Press

Sri Lanka leader suspends parliament until policy address

COLOMBO, Sri Lanka (AP) — Sri Lanka’s president suspended Parliament until Feb. 8, when he said he would announced a new set of long-term policies to address a range of issues including an unprecedented economic crisis that has engulfed the Indian Ocean nation for months. President Ranil Wickremesinghe issued an extraordinary decree suspending Parliament from […]
1 day ago
Associated Press

Italian diplomatic property vandalized in Germany, Spain

MILAN (AP) — Italy’s premier said in a statement Saturday that Italian diplomatic property had been the target of vandalism in Germany and Spain. Premier Giorgia Meloni said that the car of diplomat Luigi Estero had been set ablaze in Berlin, while the Italian consulate in Barcelona had been vandalized. There were no reports of […]
1 day ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Union Pacific 4Q profit slips 4% on weather, hiring problems