The results, aided by Union Pacific's operational changes, beat the $2.12 per share that analysts surveyed by Zacks Investment Research expected. The railroad said revenue declined 1% to $5.6 billion in the period, which still beat Street forecasts of $5.58 billion.
Union Pacific CEO Lance Fritz said the economy still appears OK with a strong jobs market and decent industrial growth, but it has weakened. "Clearly it is softening from where it was a year or a year and a half ago. But there's still growth opportunity and potential," Fritz said about the economy.
Union Pacific cut its expenses by 7% to $3.3 billion in the quarter. That helped it deal with a 4% drop in the shipments it handled. Union Pacific has been working to streamline its operations by running trains on a tighter schedule so it can use fewer locomotives, cars and employees to move the same freight. The company operates 32,400 miles of track in 23 Western states.
"They are definitely making solid progress in the transformation of their network," said Jeff Windau, an analyst with Edward Jones. Union Pacific is earlier on in the reform process than some other railroads, so it was better able to offset lower volumes with cuts. CSX Corp., which started implementing similar reforms more than two years ago, reported a 1% decline in quarterly profit earlier this week.
Union Pacific said it expects to handle about 2% less freight during the second half of the year, but that decline should be offset by additional cost reductions. The railroad expects that its workforce will be down 10% at the end of the year. And the company expects productivity gains of at least $500 million over 2019.
Shares of Union Pacific rose $7.57 to $172.13 in afternoon trading.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNP at https://www.zacks.com/ap/UNP