Union Pacific Corp (NYSE:UNP) stock fell 2.20% (As on July 27, 11:38:09 AM UTC-4, Source: Google Finance) after the company has recorded profits below estimates in its earnings report from the second quarter of 2023 due to softening demand but saw stock prices jump after also naming its new CEO. The company blamed the lower-than-expected results on lessening consumer demand, inflation and increased workforce levels. The company named Jim Vena as its new CEO, effective Aug. 14. Vena is returning to the railroad operator after serving as chief operation officer from 2019 to 2020. The company reported net income that fell to $1.57 billion, from $1.84 billion, in the year-ago period.
Moreover, Quarterly freight car velocity was 202 daily miles per car, an 8% improvement. Quarterly locomotive productivity was 126 gross ton-miles (GTMs) per horsepower day, a 2% improvement. Average maximum train length was 9,316 feet, a 1% decline. – 2 Quarterly workforce productivity decreased 5% to 983 car miles per employee. Fuel consumption rate of 1.086, measured in gallons of fuel per thousand GTMs, deteriorated 1%. Union Pacific’s first half reportable derailment rate improved 9% to 2.45 per million train miles compared to 2.68 for 2022.
UNP in the second quarter of FY 23 has reported the adjusted earnings per share of $2.57, missing the analysts’ estimates for the adjusted earnings per share of $2.75, according to Refinitiv IBES data. The company had reported 4.7 percent decline in the adjusted revenue growth to $5.57 billion in the second quarter of FY 23, missing the analysts’ estimates for revenue of $6.09 billion. This is driven by reduced fuel surcharge revenue, lower volumes, and an unfavorable business mix, partially offset by core pricing gains. Business volumes, as measured by total revenue carloads, were down 2%. Operating ratio was 63.0%, up 280 basis points. This includes an unfavorable 110 basis point impact from a one-time labor agreement payment and a 200 basis point benefit from falling fuel prices.
Additionally, the company has declared a quarterly dividend of $1.30 per share on the company’s common stock, payable Sept. 29, 2023, to shareholders of record Aug. 31, 2023. The company repurchased 600,000 shares in second quarter 2023 at an aggregate cost of $120 million
The 2023 outlook is pressured by a challenging demand and cost environment, with volume expected to be below current forecasts for industrial production of a 0.1% increase. The company has capital plan of $3.6 billion and to maintain dividend of $1.30/quarter.