OMAHA, Neb. (AP) — Union Pacific's fourth-quarter profit slipped 4% as severe winter weather snarled shipments in late December and the railroad continued to struggle to improve its operations enough to handle all the cargo businesses want to ship.
The Omaha, Nebraska-based railroad said it earned $1.6 billion, or $2.67 per share, in the fourth quarter. That's down from $1.7 billion, or $2.66 per share, a year ago.
Union Pacific said its revenue grew 8% to $6.2 billion in the quarter as it increased prices, charged more fuel surcharges and delivered 1% more freight, but its expenses were up 14% at $3.8 billion.
UP Chairman and CEO Lance Fritz said the “revenue growth was more than offset by elevated operating expenses from operational inefficiencies and a higher inflationary environment.”
The results did not meet Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $2.75 per share.
Most key performance measures deteriorated during the quarter as the railroad continued to have a hard time hiring enough employees in key locations. The railroad's average headcount is up 4% at 31,120 as it has been hiring throughout the past year, but it still needs more crews and maintenance workers.
Union Pacific said freight car velocity declined 3% to 191 daily miles per car and locomotive productivity was down 5% during the quarter.
Heading into 2023, the railroad said it still expects shipping volume to grow faster than industrial production, but the current forecast calls for industrial production to be down by half a percent this year amid recession fears.
Fritz said he expects the railroad's performance to continue improving in 2023 as it works to eliminate the delayed deliveries and other service problems that its customers complained about last year.
Even with the service problems last year, the railroad said its 2022 profit was up 7% to nearly $7 billion, or $11.21 per share, from $6.5 billion, or $9.95 per share, the year before.