Net income in the third quarter ended Sept. 30 was $1.131 billion, equal to $1.36 per share on the common stock, down 13% from $1.3 billion, or $1.51 per share, in the same period a year ago. Revenues during the quarter fell 7% to $5.174 billion from $5.562 billion.
Total volume, as measured by total revenue carloads, slipped 6% in the quarter.
“Carload volume declined in five of our six commodity groups, with coal and industrial products both down double digits,” Lance Fritz, chairman, president and chief executive officer, said during an Oct. 20 conference call with analysts. “Agricultural products volumes were up a robust 11% this quarter versus 2015, as grain shipments finally started to show some strength.”
Ag products was one of the few bright spots for Union Pacific during the quarter, a fact that wasn’t lost on Eric Butler, chief marketing officer.
“A robust U.S. grain supply and lower commodity prices generated export strength and led the grain volumes 27% in the quarter,” Butler said. “Wheat exports rebounded in the second half of the quarter, as adverse weather in South America caused significant losses, elevating demand for the higher protein U.S. wheat. Grain products carloads advanced 5% in the quarter, primarily due to increased ethanol exports and biodiesel shipments. Food and refrigerated carloads were flat in the quarter, as strong demand for imported beer offset softness in refrigerated food shipments and import sugar.”
Looking ahead, Butler said Union Pacific expects a healthy U.S. harvest and strong world demand for U.S. grain to drive favorable export trains.
“Grain products will continue to be strong, driven by ethanol exports,” he said.