US rail company Union Pacific has recorded profits below estimates in its earnings report from the second quarter of 2023 due to softening demand but saw stock prices jump after also naming its new CEO.
The company recorded a net income of $1.6bn, or $2.57 per share, a reduction on its earnings for the same period in 2022 when Union Pacific reported a net income of $1.8bn or $2.93 per share.
CEO Lance Fritz blamed the lower-than-expected results on lessening consumer demand, inflation and increased workforce levels.
However, Fritz also attempted to calm fears about the company’s 2023 outlook, saying: “We took actions throughout the second quarter to drive greater network fluidity and provide our customers with better service.
“We finished the quarter with resource levels more aligned with demand, as we stored excess locomotives, improved recrew rates and reduced borrowed-out employees.”
Additionally, while business volumes were down by 2%, measured in total revenue carloads, the rail company also marked an improvement in its service performance with a 2% rise in quarterly locomotive productivity.
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Looking at the operating numbers for the company, its operating income was $2.2bn, down 12% and its operating revenue was $6bn, down 5%, with the report blaming reduced fuel surcharge revenue and an unfavourable business mix.
However, the company’s stock prices rose 8.8% after naming its former chief operation officer Jim Vena as the successor to current CEO Lance Fritz who had announced that he would step down in February.
Discussing his focus upon entering the job of CEO, Jim Vena said: “My focus from day one will be to ensure the company delivers industry-leading customer and operating excellence, cultivates and empowers our employees and cares for the communities in which we operate.”
The slightly disappointing numbers come after a successful 2022 for the company, which saw it report a 7% increase in net income of $7bn compared to the $6.52bn it reported in 2021.