OMAHA, Neb. -- Union Pacific's fourth-quarter profit slipped 4% as severe winter weather snarled shipments in late December and the rail carrier continued struggling to improve operations to handle all the cargo businesses want to ship.
Union Pacific said Tuesday that it earned $1.6 billion, or $2.67 per share, in the fourth quarter. That's down from $1.7 billion, or $2.66 per share, a year ago.
The company said its revenue grew 8% to $6.2 billion in the quarter as Union Pacific increased prices, charged more fuel surcharges and delivered 1% more freight. But its expenses were up 14% at $3.8 billion, the company said.
Union Pacific Chairman and CEO Lance Fritz said "revenue growth was more than offset by elevated operating expenses from operational inefficiencies and a higher inflationary environment."
The results did not meet Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $2.75 per share.
Most of Union Pacific's key performance measures deteriorated during the quarter as the rail carrier continued struggling to hire in key locations. Its latest average head count is up 4% to 31,120 employees. The company has been hiring throughout the past year but still needs more crews and maintenance workers in certain locations. Executives said about 600 additional workers are currently in training.
Union Pacific said freight car velocity declined 3% to 191 daily miles per car, and locomotive productivity was down 5% during the quarter.
Edward Jones analyst Jeff Windau said he anticipated the ongoing hiring challenges, as well as pressure from fuel costs, which increased 43% in the quarter.
Investment manager Louis Navellier, who holds Union Pacific stock in his funds, said added fuel costs clearly hurt the railroad's bottom line.
Navellier said he had hoped the rail majors would pick up additional grain volume because of low water levels last fall on the Mississippi River, which limited how much barges could transport. But, he said, it appears the railroads ultimately didn't have much available capacity to take on the extra business.
Heading into 2023, Union Pacific said it still expects shipping volume to grow faster than industrial production, but its current forecast calls for industrial production to decrease by half a percent this year amid recession fears.
Fritz said he expects the rail carrier's performance to continue improving in 2023 as Union Pacific works to eliminate delayed deliveries and other service issues that its customers complained about last year.
Even with the service issues, Union Pacific said its 2022 profit was up 7% to nearly $7 billion, or $11.21 per share, from $6.5 billion, or $9.95 per share, the year before.
In Arkansas, Union Pacific operates the Jenks Locomotive Facility in North Little Rock. Often called the Jenks Shop, it is the largest of its kind in the Union Pacific network and among the largest in the world, according to the company.
The complex employs more than 1,100 people, who perform heavy maintenance on a fleet of 7,000 locomotives that pull more than 2,000 trains daily through the western two-thirds of the United States, according to the Union Pacific website.
Shares of Union Pacific Corp. fell more than 3% Tuesday after the results were released, closing at $203.18 on the day in New York.