By JOSH FUNK, AP Business Writer
OMAHA, Neb. (AP) — Union Pacific hauled in 23% more profit in the third quarter even though the total number of shipments it delivered remained flat overall and the supply chain remained clogged.
The Omaha, Nebraska-based railroad said Thursday that it made $1.67 billion, or $2.57 per share, in the quarter. That’s up from $1.36 billion, or $2.01 per share, a year ago when the economy was surging back from the worst of the coronavirus pandemic.
The results beat Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $2.48 per share.
Last year, volume plummeted in the first half of the year as restrictions designed to slow the spread of the coronavirus brought the economy to a crawl before rebounding sharply in the second half of the year as those restrictions began to be lifted.
Union Pacific cut its outlook for volume growth this year because of the ongoing supply chain problems and weak automotive production. The railroad now expects shipping volume to be up about 5% overall, which suggests volume will remain flat through the fourth quarter. Three months ago, Union Pacific had predicted 7% volume growth in 2021.
The railroad said its revenue grew 13% to $5.57 billion in the quarter as it generated more money on nearly every category of freight with higher prices except automotive where that industry has been struggling to maintain production amid the ongoing chip shortages. Three analysts surveyed by Zacks expected $5.38 billion.
The number of automotive shipments fell 18% in the quarter and weighed down volume overall for the railroad. The number of intermodal shipping containers of goods that the railroad delivered also fell 6% as the overall supply chain struggled to move all those containers off ships at the ports and into warehouses after railroads delivered them.
“The Union Pacific team successfully navigated global supply chain disruptions, a major bridge outage, and additional weather events to produce strong quarterly revenue growth and financial results,” said Lance Fritz, Union Pacific’s chairman, president, and CEO.
Fritz said the economy remains strong overall but consumer confidence would improve if the pandemic was under better control, and retail sales might be even stronger without the delivery delays.
The supply chain issues will likely improve as the ports and warehouses are able to add more workers and find more truck drivers to deal with the backlog, but he said the issues are likely to linger into next year.
Edward Jones analyst Jeff Windau said the results show that Union Pacific is continuing to get more efficient because it was able to deliver higher profits even when dealing with significant operational disruptions and flat volume during the quarter.
Union Pacific is one of the nation’s largest railroads, and it operates 32,400 miles (52,000 kilometers) of track in 23 Western states.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNP at https://www.zacks.com/ap/UNP
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