Summary
Union Pacific Corporation (UNP) reported its second quarter and year-to-date results for 2015, showing a decline in operating revenues compared to the prior year, primarily driven by a significant decrease in coal shipments and lower fuel surcharge revenue. Despite revenue headwinds, the company demonstrated an improved operating ratio year-to-date, indicating effective cost management. Key drivers for the revenue decline include lower energy prices impacting coal and related product demand, alongside broader economic factors affecting industrial products. However, positive trends were observed in automotive and intermodal segments, driven by consumer demand and intermodal conversions. Financially, UNP maintained a strong liquidity position with an increase in cash and cash equivalents. The company actively managed its capital structure through debt issuance and continued its share repurchase program. Despite cost pressures from wage inflation and increased capital projects, operational efficiency metrics such as average train speed improved. The company faces ongoing litigation risks, notably related to fuel surcharges, which it is defending vigorously.
Financial Highlights
47 data points| Revenue | $5.43B |
| Operating Expenses | $3.48B |
| Operating Income | $1.95B |
| Interest Expense | $153.00M |
| Net Income | $1.20B |
| EPS (Basic) | $1.38 |
| EPS (Diluted) | $1.38 |
| Shares Outstanding (Basic) | 872.20M |
| Shares Outstanding (Diluted) | 875.20M |
Key Highlights
- 1Operating revenues for the three months ended June 30, 2015, decreased by 10% to $5.43 billion from $6.02 billion in the prior year period, largely due to a 31% drop in coal revenue and lower fuel surcharge revenue.
- 2Net income for the second quarter of 2015 was $1.20 billion, or $1.38 per diluted share, a decrease from $1.29 billion, or $1.43 per diluted share, in the same period of 2014.
- 3Operating expenses decreased by 9% to $3.48 billion in Q2 2015 compared to $3.82 billion in Q2 2014, primarily driven by a 41% reduction in fuel costs and cost savings from lower volumes.
- 4The operating ratio for the second quarter improved to 64.1% from 63.5% in the prior year, despite a 10% decline in freight revenues, indicating improved cost control relative to revenue.
- 5Cash provided by operating activities increased to $3.77 billion for the first six months of 2015 from $3.22 billion in the prior year, reflecting improved working capital management and timing of tax payments.
- 6The company actively returned capital to shareholders, with dividends paid increasing significantly in the first six months of 2015 to $1.40 billion from $0.78 billion in the prior year, and continuing share repurchases.
- 7Total debt increased to $13.34 billion at June 30, 2015, from $11.48 billion at December 31, 2014, while the debt-to-capital ratio rose to 38.9% from 35.1%, reflecting strategic debt issuance.