UNION PACIFIC CORP Annual Report, Year Ended Dec 31, 2025

Union Pacific Corporation (UNP) reported fiscal year 2025 results demonstrating resilience and strategic execution, despite ongoing macroeconomic uncertainties. The company achieved a 1% increase in freight revenue to $23.2 billion, driven by core pricing gains and a 1% volume growth, although this was partially offset by shifts in traffic mix and lower fuel surcharge revenues. Safety remains a paramount focus, with significant year-over-year improvements in both personal injury rates (down 24%) and derailment incident rates (down 19%), attributed to enhanced training, technology leverage, and employee engagement. Service metrics also saw strong performance, with freight car velocity increasing by 8% and terminal dwell time decreasing by 8%. Operationally, the company adapted to changing demand, maintaining network fluidity. Financially, operating income grew 1% to $9.8 billion, and the operating ratio improved to 59.8%. Net income rose 8% to $7.1 billion, or $11.98 per diluted share. The company generated substantial operating cash flow of $9.3 billion and free cash flow of $2.3 billion. A significant development is the pending acquisition of Norfolk Southern, announced in July 2025. While the merger application was recently deemed incomplete by the STB, prompting a resubmission, the strategic rationale aims to create a dominant transcontinental railroad. This merger, however, introduces integration risks and regulatory hurdles that investors will monitor closely. The company also paused its share repurchase program due to the acquisition. Looking ahead to 2026, Union Pacific anticipates continued macroeconomic uncertainty impacting volumes, particularly in international intermodal, while expecting strength in coal. The company remains committed to its core strategies of Safety, Service, and Operational Excellence.