UP’ Fritz: 2021 “the most profitable year ever”
Union Pacific (UP) released its fourth quarter 2021 results on January 20, including operating revenue of $5.733 billion, up 12% from the same period in 2020 and 10% from 2019. business mix and base price gains,” which were partially offset by a 4% decline in business volumes, as measured by total carloads. The Class I railroad also released results for the full year of 2021, which chairman and chief executive Lance Fritz called “the most profitable year ever.”
For comparison, UP noted that its 2020 results are adjusted to exclude a previously announced $278 million pretax impairment charge, without a case, related to its investment in the Brazos yard.
For the fourth quarter of 2021, UP’s operating ratio of 57.4% deteriorated 180 basis points from the fourth quarter of 2020 as higher fuel prices negatively impacted 100 basis points. basis, according to the Class I railroad.
Net income was $1.711 billion for the quarter (or $2.66 per diluted share), compared to $1.589 billion (or $2.36 per diluted share) in 2020, up 8%. Operating profit was $2.440 billion, up 7% from $2.284 billion in the 2020 quarter.
On the operational performance side, UP said its network recovery efforts were “slowed by the impacts of COVID on crew availability.” Quarterly freight car speed was 197 daily miles per car, down 12% from the fourth quarter of 2020, and quarterly locomotive productivity was 129 gross ton miles (GTM) per horsepower-day, or a decrease of 9%. In addition, the average maximum train length was 9,319 feet, an increase of 2%.
Full Year 2021 vs. 2020 Adjusted Highlights:
• Operating revenue of $21.8 billion increased 12%, driven by volume growth (4%), higher fuel surcharge revenue, base price gains and a mix of positive activities, UP reported.
• UP’s cost/income ratio of 57.2% improved by 130 basis points, as higher fuel prices had a negative impact of 140 basis points.
• Operating profit of $9.3 billion increased by 15%.
• UP said network operations were “challenged by weather events, wildfires, COVID impacted crew availability and supply chain disruptions”. It reported a freight car speed of 203 daily miles per car (a drop of 8%); locomotive productivity of 133 GTM per horsepower-day (a decrease of 3%); and average maximum train length of 9,334 feet (an increase of 6%).
Additionally, the railroad’s capital program for 2021 totaled $3.0 billion, an increase of 7% from $2.8 billion in 2020.
UP said its capital plan for 2022 will be around $3.3 billion. It will cover infrastructure replacement (including energy management systems), $1.9 billion; commercial capacity/facilities, $0.6 billion; locomotives/equipment, $0.5 billion; and technology/other (including positive train control), $0.3 billion.
Looking ahead, UP said it expects “full-year volume growth above industrial production” and “price gains above inflation”, as well as a operating ratio of approximately 55.5%.
“The Union Pacific team wrapped up its most profitable year ever in 2021,” said UP Chairman and CEO Lance Fritz. “We delivered double-digit revenue growth in the fourth quarter as we leveraged our excellent rail franchise to drive a positive business mix and core price gains, despite continued challenges in the service chain. global supply which had an impact on volumes. For the third consecutive year, we improved our fuel consumption rate, took steps to reduce our carbon footprint and meet the targets of our 2021 Climate Action Plan. Although our safety and operating performance in 2021 have not met expectations, we are looking to convert recent progress into sustainable improvement in 2022. While uncertainty remains around COVID variants and supply chain disruptions, we are seeing a positive demand environment in 2022 and continued traction of business development. efforts that drive growth as we deliver value to all of our stakeholders. »
The UP Investors website provides more information on the fourth quarter and full year 2021 financial results.