Union Pacific (UNP) Q1 2025 earnings summary

Executive summary

• Net income was $1.6 billion and diluted EPS was $2.70 for Q1 2025, both nearly flat year-over-year, with a 7% headwind from fuel and leap year impacts; operating ratio held steady at 60.7%.

• Freight revenue grew 1% year-over-year, or 4% excluding fuel surcharge, both first quarter records, driven by 7% volume growth and core pricing gains, offset by business mix and lower fuel surcharge revenue.

• Record operational performance achieved in personal injury rate, fuel consumption rate, freight car velocity, and workforce productivity, with workforce productivity up 9%.

• Service and business development supported demand in Intermodal, Coal, and Industrial Chemicals.

• Operating expenses were flat as productivity improvements and lower fuel costs offset inflation and volume-related costs.

Financial highlights

• Operating revenue was $6.03 billion, essentially flat year-over-year, with freight revenue at $5.7 billion, up 1%.

• Operating income was $2.4 billion, unchanged from Q1 2024.

• Free cash flow for Q1 2025 was $468 million, down from $525 million in Q1 2024.

• Cash from operations was $2.2 billion, up year-over-year; $2.5 billion returned to shareholders in Q1.

• Fuel surcharge revenue declined $100 million due to lower fuel prices, reducing freight revenue by 275 basis points.

Outlook and guidance

• 2025 outlook affirmed: volume expected to be impacted by mixed economic conditions, coal demand, and tough year-over-year intermodal comparisons.

• EPS growth targeted to meet 3-year CAGR of high-single to low-double digits; capital plan set at $3.4 billion.

• Share repurchases planned between $4.0 and $4.5 billion for 2025.

• Sufficient borrowing capacity and liquidity to sustain operations through extended periods of lower volumes.

• Management expects to fund share repurchases and capital investments through operating cash flow, property sales, debt, and cash on hand.