Union Pacific records most profitable year yet
Union Pacific Railroad have reported their most profitable year in the company’s history, after posting encouraging results for Q4 and 2012.
The company has posted a 10 percent rise in diluted earnings per share to $2.19 for Q4, in addition to a three percent rise in operating revenues and a seven percent rise in operating income.
Q4 revenues saw a rise in all freight sectors, particularly chemicals, which rose by 15 percent. Other sectors include; automotive up 14 percent, intermodal up 6 percent and industrial products up three percent, with declines in the coal (down seven percent) and agricultural (down eight percent) sectors.
For 2012 overall, there was a rise of 23 percent for diluted earnings per share, a seven percent rise in operating revenues and an 18 percent rise in operating income.
"Our diverse portfolio of business, solid core pricing gains, and efficient network operations drove these results despite significantly weaker coal and grain markets," said Jack Koraleski, Union Pacific chief executive officer. "Although it was a challenging year on many fronts, 2012 was Union Pacific's most profitable year in our 150-year history. It's a testament to the strength and diversity of our franchise, the dedication and commitment of our employees, and our unrelenting focus on creating value for our customers."
"For 2013, we're expecting to see many of the same challenges we faced last year," Koraleski said. "We'll also be watching to see what happens in Washington and how it impacts potential economic growth. That said, we successfully navigated through the complexities of 2012, and we'll continue to follow that same strategy going forward. We'll remain agile and leverage the strengths of our diverse franchise with a focus on creating value for our customers and generating strong returns for our shareholders again in 2013."
Fourth Quarter Summary
Fourth quarter business volumes, as measured by total revenue carloads, were down 2 percent compared to 2011. Volume declines in coal and agricultural products more than offset growth in chemicals, automotive and intermodal shipments. Volumes for industrial products were flat versus 2011. Quarterly operating revenue increased 3 percent in the fourth quarter 2012 to $5.25 billion versus $5.1 billion in the fourth quarter 2011. In addition:
- Quarterly freight revenue increased 2 percent compared to the fourth quarter 2011, mainly driven by core pricing gains and fuel surcharge recoveries.
- Union Pacific's operating ratio of 67.1 percent was a fourth quarter record, 1.2 points better than the fourth quarter 2011.
- Average quarterly diesel fuel prices increased 3 percent to $3.25 per gallon in the fourth quarter 2012 compared to $3.16 per gallon in the fourth quarter 2011.
- The Customer Satisfaction Index of 93 set a fourth quarter record, 1 point better than the fourth quarter 2011.
- Quarterly train speed, as reported to the Association of American Railroads, was 26.7 mph, up 4 percent from the fourth quarter 2011.
- The Company repurchased 2.0 million shares in the fourth quarter 2012 at an average share price of $121.81 and an aggregate cost of $248 million.
2012 Full Year Summary
- For the full year 2012, Union Pacific reported net income of $3.9 billion or $8.27 per diluted share. This compares to $3.3 billion or $6.72 per diluted share in 2011, 20 and 23 percent increases, respectively. Operating revenue totaled a record $20.9 billion versus $19.6 billion in 2011. Operating income increased 18 percent to $6.7 billion, up from $5.7 billion in 2011.
- Four of the six business groups reported freight revenue and volume growth in 2012. Freight revenue grew 6 percent to $19.7 billion compared to $18.5 billion in 2011. Car loadings were flat versus 2011.
- UP's operating ratio in 2012 was 67.8 percent, improving 2.9 points compared to 2011.
- Average diesel fuel prices increased 3 percent to $3.22 per gallon in 2012 from $3.12 per gallon in 2011.
- The Company increased its quarterly dividend per share by 15 percent to $0.69 cents per share. Total dividends declared for the full year 2012 grew 29 percent compared to the full year 2011.
- The Company repurchased more than 12.8 million shares in 2012 at an average share price of $115.01, and an aggregate cost of $1.5 billion.
DHL Claim Multi-Sector Collaboration Key to Fighting COVID
Since January, global logistics leader DHL has distributed more than 200 million doses of the COVID vaccine to 120+ countries around the globe. While the US and UK recently rolled out immunisation plans to most citizens, countries with less developed infrastructure still desperately need more doses. In the United Arab Emirates (UAE), which currently has one of the highest per-capita immunisation rates, the government set up storage facilities to cover domestic and international demand. But storage, as we’ve learned, is little help if you can’t transport the goods.
This is where logistics leaders such as DHL make their impact. The company built over 50 new partnerships, bilateral and multilateral, to collaborate with pharmaceutical and private sector firms. With more than 350 DHL centres pressed into service, the group operated 9,000+ flights to ship the vaccine where it needed to go.
With new pandemic knowledge, DHL just released its “Revisiting Pandemic Resilience” white paper, which examined the role of logistics and supply chain companies in handling COVID-19. As Thomas Ellman, Head of Clinical Trials Logistics at DHL, said: “The past one year has highlighted the importance of logistics and supply chain management to manage the pandemic, ensure business continuity and protect public health. It has also shown us that together we are stronger”.
Multisector partnerships, DHL said, enabled rapid, effective vaccine distribution. While international scientists developed a vaccine in record time—five times faster than any other vaccine in history—manufacturers ramped up production and logistics teams rolled out distribution three times faster than expected. When commercial routes faced backups, logistics operators worked with military officers to transport vaccines via helicopters and boats.
In the UAE, the public-private HOPE Consortium distributed billions of COVID-19 doses to its civilians as well as other countries in need by partnering with commercial organisations such as DHL. For the first time, apropo for an unprecedented pandemic, logistics companies made strong connections with public health and government.
“While the race against the virus continues, leveraging the power of such collaborations and data analytics will be key”, said Katja Busch, Chief Commercial Officer DHL and Head of DHL Customer Solutions & Innovation. “We need to remain prepared for high patient and vaccine volumes, maintain logistics infrastructure and capacity, while planning for seasonal fluctuations by providing a stable and well-equipped platform for the years to come”.
How Do We Sustain Immunisation?
By the end of 2021, experts estimate that we need approximately 10 billion doses of vaccines—many of which will be shipped to areas of the world, such as India, South Africa, and Brazil, that lack significant infrastructure. This is perhaps the greatest divide between countries that have rolled out successful immunisation programmes and those that have not. As Busch noted, “the UAE’s significant investments in creating robust air, sea, and land infrastructure facilitated logistics and vaccine distribution, helping us keep supply chains resilient”.
Neither is the novel coronavirus a one-time affair. If predictions hold, COVID will be similar to seasonal colds or the flu: here to stay. When fall comes around each year, governments will need to vaccinate the world as quickly as possible to ensure long-term immunisation against the virus. This time, logistics companies must be better prepared.
Yet global immunisation, year after year, is no small order. To keep reinfection rates low and slow the spread of COVID, governments will likely need 7-9 billion annual doses of the vaccine to meet that mark. And if DHL’s white paper is any judge of success, multi-sector supply chain partnerships will set the gold standard.