Union Pacific Corporation (UNP, Financial) reported first-quarter earnings and revenue that fell short of Wall Street expectations, primarily due to weak automotive shipments and reduced fuel surcharges. This led to a 3.5% drop in its stock during pre-market trading. The Omaha, Nebraska-based company's freight volume was pressured by economic uncertainty and decreased coal demand.
The decline in coal transportation demand stems from customers shifting to cheaper natural gas inventories for energy. However, with a recent executive order signed by former President Donald Trump to boost coal production, this trend might reverse. Union Pacific, along with its East Coast counterpart Norfolk Southern, reaffirmed its annual targets.
The company's operating ratio, a key profitability metric, remained at 60.7%, unchanged from the previous year. Intermodal revenue, which involves transporting goods using two or more modes of transportation, rose by 10% to $1.19 billion for the quarter. Adjusted earnings per share for the first quarter were $2.70, slightly below analysts' average estimate of $2.75. Revenue for the quarter ending March 31 slightly fell to $6.03 billion, missing the market expectation of $6.08 billion.
