By JOSH FUNK
AP Business Writer
OMAHA, Neb. (AP) — Union Pacific hauled in 24% more profit in the fourth quarter despite supply chain problems and weak auto production, but that is also compared with a period last year that included a one-time $278 million charge.
The Omaha, Nebraska, railroad on Thursday posted earnings of $1.71 billion, or $2.66 per share, in the last three months of 2021. That’s up from $1.38 billion, or $2.05 per share, a year ago. Without last year’s charge, the railroad’s profit would have been up 8% over last year’s adjusted results of $1.6 billion, or $2.36 per share.
Union Pacific hauled 4% less freight in the fourth quarter as the computer chip shortage continued to hurt auto production and supply chain problems cribbed shipments of imported containers of goods. The railroad also wrestled with crew shortages as COVID-19 spread through its workforce.
But the results exceeded Wall Street expectations of $2.60 per share, according to a survey by the data company Zacks Investment Research.
Revenue grew 12% to $5.73 billion, which also surpassed Street forecasts, as it increased prices and imposed fuel surcharges in response to rising diesel prices.
“Uncertainty remains around COVID variants and supply chain disruptions,” said CEO Lance Fritz, but the railroad expects strong demand to continue in 2022 and Union Pacific recently won several new contracts that will help boost volume.
Most of the railroad’s challenges are still related to the pandemic as staffing issues at the railroads, ports and warehouses slow shipments and the chip shortage hurts production of some products, said Edward Jones analyst Jeff Windau, but he said Union Pacific was able to increase prices enough to offset those problems.
Fritz believes that the railroad benefitted from having more than three-quarters of its workforce vaccinated because cases didn’t spike as much among rail workers as it did in the broader community when the highly contagious omicron variant arrived. But Union Pacific is still dealing with significant numbers of illnesses.
Union Pacific expects shipping volume to grow faster this year than industrial production, which it believes will rise 4.8%.
The railroad plans to spend $3.3 billion on capital improvements to its network of 32,400 miles (52,000 kilometers) of track in 23 Western states as it invests more for growth. A year ago, UP spent about $3 billion.
Later Thursday another major railroad, Florida’s CSX Corp., will also report quarterly earnings.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNP at https://www.zacks.com/ap/UNP
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