UP: ‘Strong’ 2Q21 Results Amid Supply Chain Disruptions

Those business volumes were driven by gains in bulk (+13%), industrial (+15%) and premium (+31%).

Sequentially, second-quarter freight revenue was up 10% vs. first-quarter 2021 ($4.649 billion).

UP’s total operating revenue for second-quarter 2021 came in at $5.504 billion, up 30% from second-quarter 2020.

Net income for the three months ending June 30 was $1.8 billion, or $2.72 per diluted share. That compares with net income of $1.1 billion, or $1.67 per diluted share, for the same period last year. Additionally, operating income of $2.5 billion grew 50% from 2020.

While the operating ratio of 55.1% improved 590 basis points, the Class I railroad reported that higher fuel prices negatively impacted it by 210 basis points.

Among UP’s other second-quarter results:
• Freight car velocity was 213 daily miles per car, a 6% decline from second-quarter 2020.
• Locomotive productivity was 140 gross ton-miles (GTMs) per horsepower day, a 3% improvement over the same period last year.
• Average maximum train length was 9,410 feet, a 9% increase over 2020.
• Fuel consumption rate, as measured in gallons of fuel per thousand GTMs, improved 3% from second-quarter 2020.
• Workforce productivity was 1,060 car miles per employee, a 22% improvement over 2020.

In a network update, UP noted that it has completed seven 15,000-foot sidings and has begun construction on 20-plus additional ones.

UP Chairman, President and CEO Lance Fritz

“The Union Pacific team leveraged volume growth, core pricing gains and productivity to produce record quarterly results,” President and CEO Lance Fritz said. “Beyond our strong financial performance, we also made progress on our goal to reduce our carbon footprint, which includes a 3% improvement in our fuel consumption rate. Importantly, these strong results were achieved in a challenging environment as our rail network continues to be impacted by supply chain disruptions, particularly in the intermodal space.”

2021 Outlook

Moving into the second half of 2021, UP “will continue working with our customers and the broader supply chain to increase fluidity and efficiently handle the strong demand for freight transportation,” Fritz said.

The railroad reported “stronger” 2021 guidance, noting full-year volume growth of 7% and 200 basis points of operating ratio improvement. It affirmed “pricing gains in excess of inflation dollars; $500 million of productivity; and capital spending < 15% of revenue.”

UP’s Investor Presentation page provides more information.

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