Union Pacific’s Q3 2016 Earnings Review: Lower Shipments And Fuel Surcharge Revenue Weigh On Results

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UNP: Union Pacific logo
UNP
Union Pacific

Union Pacific reported a 9% year-over-year decline in its Q3 earnings per share, with top line headwinds translating into lower profits. A decline in shipment volumes and fuel surcharge revenue negatively impacted the company’s overall revenue, with lower operating expenses partially offsetting the impact of lower revenue on the company’s profits. A decline in Union Pacific’s coal shipments, with low natural gas prices negatively impacting the demand for coal from utilities, drove the overall decline in the company’s shipment volumes. In addition, lower fuel surcharge revenue due to a decline in fuel prices, also contributed to the decline in the company’s top line. Though lower volume-related operating expenses (including fuel expenses) and Union Pacific’s cost reduction initiatives partially offset the impact of lower revenue on the company’s operating profits, the net impact was a 180 basis points deterioration in the company’s operational ratio.

UNP Q3 2016 Earnings

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Union Pacific

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