Union Pacific Sees "All-Time Best" Quarterly Operating Ratio

Union Pacific (NYSE: UNP) reached a quarterly record for its operating ratio (OR) even though third-quarter profit was flat compared to the same period in 2018.

UNP's third-quarter OR was 59.5%, which is an "all-time best" quarterly operating ratio for the company and lower than the 61.7% in the third quarter of 2018. Operating ratios can be a measure of a company's profitability, with a lower percentage implying higher profitability.

Third-quarter net profit was $1.6 billion, or $2.22/diluted share, compared with $1.6 billion, or $2.15/diluted share, in the same period in 2018.

Source: Union Pacific

Operating revenues fell 7% to $5.5 billion in the third quarter amid an 8% decrease in revenue carloads. Although industrial volumes were higher, declines in agricultural products, premium and energy volumes muted overall carload growth.

Meanwhile, expenses fell 10% to $3.3 billion, compared with nearly $3.7 billion in the third quarter of 2018.

Source: Union Pacific

Performance metrics were mixed in the third quarter. While freight car velocity rose 10% to 213 daily miles per car, average train speed fell 1% to 23.7 miles per hour. But average terminal dwell time, which is the amount of time a train spends at a terminal, fell 20% to 23.4 hours.

UNP leadership conducted an earnings call that started at 8:45 am EDT.

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