Union Pacific CEO: ‘strong pricing environment will continue in 2022’

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Union Pacific Corp (NYSE: UNP) on Thursday reported better-than-expected results for its fiscal fourth quarter, resulting in a 3.0% increase in the stock price.

Highlights from UNP’s Q4 earnings report

Union Pacific said its net income printed at $1.71 billion that translates to $2.66 per share. In the same quarter last year, its net income was capped at $1.38 billion or $2.05 per share. At $5.73 billion, total quarterly revenue went up 11.5% year-over-year.

According to FactSet, experts had forecast $2.61 of EPS on $5.60 billion in revenue. The transport company agreed that supply constraints weighed on volumes in Q4 but said price increases and higher fuel surcharges helped offset it.

Operating expenses jumped 5.0% on $1.07 billion in costs related to compensation and benefits. The railroad holding company repurchased $1.4 billion worth of its stock in the recent quarter, as per the earnings press release.

CEO Fritz’ remarks on CNBC’s ‘Squawk on the Street’

On CNBC’s “Squawk on the Street”, CEO Lance Fritz said 2021 was a record year for the railroad and that the strong pricing environment will continue this year.

It was the 5th consecutive year of margin improvement for UNP. As we look into 2022, one of the three pillars of that operating margin improvement, pricing, it looks like it’ll continue at least in the first of the year. It’s a really good pricing environment against a really tight truck capacity.

Fritz agreed that supply constraints and transportation bottlenecks resulted in a hit to the international intermodal business in the back half of 2021. He does see signs of improvement on that front in 2022 but says it’ll take time to get back to normal.

In November, Osterweis’ Capital Management’s Larry Cordisco said UNP could outpace inflation.

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