Houston — Union Pacific faced a challenging first quarter, aided by a decline in coal revenues and volumes, but the railroad expects improved demand and growth as the year progresses, executives said April 22.
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"Coal and renewable carloads were down 16% as a result of continued high customer inventory levels, a contract loss and weather-related challenges, which were partially offset by higher natural gas prices," Kenyatta Rocker, executive VP of Marketing and Sales, said on the first-quarter earnings call.
UP's coal and renewables revenues were $341 million, down 19% year on year. Volumes totaled approximately 174,000 carloads, down 16% from Q1 2020, and the average revenue per car in the segment was $1,958, down 3%.
Regarding growth opportunities, coal, and perhaps petroleum and frac sand, are the exceptions, according to the company.
"You take those off the table, and our expectation is we grow at a better rate than our served markets," Lance Fritz, chairman, president and CEO, said.
First quarter revenues were $5 billion, down 4% from the year-ago quarter, while net income was over $1.3 billion, down 9%.
Losses in the first quarter were driven by weather events and the leap year last year, Rocker said. Plus, gains in UP's intermodal and export grains were offset by declines in its industrial and energy segments.
"While it was a tough quarter, it does not dampen our expectations," Fritz said. "We're in a terrific position to take advantage of the improving economic outlook and grow our volume."
Looking ahead, UP sees an improving demand trajectory and expects full-year carload growth of 6%, Jennifer Hamann, executive VP and CFO, said.