Union Pacific’s Q2 2016 Earnings Preview: Lower Shipments And Fuel Surcharge Revenue To Weigh On Results

July 19th, 2016 by Trefis Team
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UNP: Union Pacific logo
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Union Pacific

We expect Union Pacific’s Q2 2016 results to be adversely affected by top line headwinds, resulting from a decline in shipment volumes and fuel surcharge revenue. A sharp decline in coal shipments, as a result of weak demand for the commodity from utilities in the midst of soft natural gas prices, will drive the decline in overall shipment volumes for the company. Lower fuel surcharge revenue, resulting from a weakness in crude oil and consequently diesel prices, will also negatively impact Union Pacific’s top line. The decline in revenue will take its toll on Union Pacific’s EPS, with lower operating expenses (as a result of lower shipment volumes), particularly lower fuel-related expenses, expected to partially offset the impact of lower revenue on earnings.

UNP Q2 2016 Earnings 1

UNP Q2 2016 Earnings 2

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Note: Diesel prices refer to benchmark New York Harbor Ultra-Low Sulfur No 2 Diesel Spot Price

Check out our forecasts for U.S. coal shipments

Have more questions about Union Pacific? See the links below.

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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