US railroad giant Union Pacific (UP) has reported a 9% decrease in net income for 2023 during its annual earnings call, despite achieving a 1% increase for Q4, citing lower fuel surcharge revenue and volume declines. 

The second largest railroad in the US, UP’s year-end results showing a $6.4bn net income, down from $7bn in 2022, fall in line with its Q2 reports, when it also recorded an 11% decrease in net income, despite the addition of new CEO Jim Vena in the second half of the year. 

Looking to assuage fears about the downward results, Vena said: “Our fourth quarter results show much of what’s possible at Union Pacific and that we’re on the right path to reaching our goals. Service and operational metrics showed great improvement in the quarter. 

“Those improvements propel us toward a service product that supports growth with our customers. We enter 2024 with strong momentum, recognizing we have plenty of opportunity to improve.” 

In line with Vena’s comments on the coming year, and despite a muted outlook led by international intermodal business loss and soft economic conditions, UP did not adjust its capital allocation strategy for 2024, sticking with its capital plan of $3.4bn. 

Other data from the earnings report included a 7% improvement in freight car velocity for the year, 14% for Q4, a 2023 operating ratio of 62.3%, down 220 basis points, and a flat average maximum train length of 9,356 feet. 

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The report will no doubt be disappointing for a company which had recorded a 7% increase in net income in 2022, with stocks reflecting a slight downturn with a 2.6% decrease since the earnings report was released.