Summary
Union Pacific Corporation (UNP) filed an 8-K on January 9, 2019, to provide a preliminary update on its full-year 2018 operating ratio performance. The company now anticipates achieving a record full-year 2018 operating ratio of 62.7%, representing a slight 0.1 point improvement compared to its 2017 adjusted non-GAAP operating ratio. This revised expectation surpasses earlier guidance from November 2018, which predicted no improvement due to revenue slowdowns and increased costs. The improved outlook is attributed to stronger-than-anticipated December carloadings, particularly international container imports, lower diesel fuel prices, and better cost management initiatives stemming from the early stages of their "Unified Plan 2020" implementation. Management expressed optimism regarding these cost performance improvements.
Key Highlights
- 1Union Pacific (UNP) expects to report a record full-year 2018 operating ratio of 62.7%.
- 2This represents a 0.1 point improvement over the 2017 adjusted non-GAAP operating ratio.
- 3The revised 2018 outlook is better than previously guided in November 2018, which expected no improvement.
- 4Key drivers for the improved performance include stronger December carloadings (especially international container imports).
- 5Lower diesel fuel prices also contributed positively to the operating ratio.
- 6Early results from the "Unified Plan 2020" implementation are showing improved cost performance.
- 7UNP will release its official Q4 2018 earnings and host a conference call on January 24, 2019.