Union Pacific (UNP.US) exceeded earnings expectations in Q4, demonstrating improved operating efficiency.

Union Pacific (UNP.US) announced its fourth-quarter and full-year financial results for 2024. The company's fourth-quarter revenue was $6.1 billion, down 1% YoY, primarily due to a decrease in fuel surcharge revenue, an unfavorable business mix, and other income. However, the growth in volume and core price partially offset this impact. Moreover, the company's fourth-quarter net profit was $1.8 billion, or $2.91 diluted earnings per share, topping the consensus estimate of $2.79. This performance included $40 million in labor costs related to the approval of crew staffing agreements. In comparison, the company's fourth-quarter net profit was $1.7 billion, or $2.71 diluted earnings per share, in 2023. From a full-year perspective, Union Pacific reported a net profit of $6.7 billion in 2024, or $11.09 earnings per share, down from $6.4 billion in 2023, or $10.45 earnings per share. Specifically, the company's fourth-quarter revenue was $6.1 billion, down $50 million YoY, or 1.0% YoY. Operating carloads grew 5%, while operating ratio improved 220 basis points to 58.7%, including a 70-basis-point headwind from crew staffing agreements. Moreover, the company made significant progress in operating efficiency: operating income reached $2.5 billion, up 5% YoY; car speeds increased 1% to 219 miles per car per day; labor productivity improved 6% to 1,118 miles per employee; and fuel consumption rate improved 1% to 1.078 (measured in gallons per thousand total ton-miles). However, quarterly locomotive productivity declined 3% to 136 total ton-miles per horsepower. Looking ahead to 2025, Union Pacific plans to maintain its target set at its investor day. Despite the potential impact of a complex economic environment, coal demand, and year-over-year challenges in international intermodal, the company still plans to improve its operating ratio through pricing strategies and achieve its three-year target of a high single-digit to low double-digit compound annual growth rate for earnings per share. The company will continue to maintain industry-leading operating ratios and investment capital returns and maintain its long-term capital allocation strategy. In 2025, the company plans to invest $3.4 billion in capital expenditures and plans to repurchase $4.0 billion to $4.5 billion in stock.