Union Pacific Corp. delivered 4% more profit in the second quarter even though it hauled less freight because it cut its expenses by 7%.
The Omaha, Nebraska-based railroad said Thursday it earned $1.57 billion, or $2.22 per share, in the quarter. That’s up from $1.51 billion, or $1.98 per share, a year ago.
The results, aided by Union Pacific’s operations 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 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 $7.44 to $171.99 in morning trading.