Fuel costs surged 69%, eating up profit margins Union Pacific (UNP.US) Q3 revenue records, and it's hard to hide hidden cost concerns

The Zhitong Finance App learned that before the US stock market on October 22 (Thursday), the western US railroad giant United Pacific (UNP.US) announced financial results for the third quarter of 2026. According to financial reports, the company achieved revenue of 7.197 billion US dollars in Q3, an increase of 15% year over year, exceeding market expectations of 7.03 billion US dollars, and a record; after adjustment, diluted EPS was 3.53 US dollars, an increase of 15% year over year, higher than analysts' unanimous expectations of 3.48 US dollars.

Financial reports showed that Q3 net profit was US$2,076 billion, up 16% year on year; diluted earnings per share (EPS) was US$3.49, up 16% year on year; operating profit reached US$2,943 billion, up 15% year on year; and operating expenses ratio was 59.1%, up 0.1 percentage point year on year, and adjusted 58.8%.

Notably, the average price of diesel for locomotives reached 4.21 US dollars/gallon this season, surging 64% year on year, and fuel costs reached 1.04 billion US dollars, surging 69% year on year, causing a drag on operating expenses by about 140 basis points, but improvements in core operating efficiency still pushed this indicator to maintain the 60% mark.

By business, freight revenue reached 6.813 billion US dollars, up 15% year on year, and 6% year on year after excluding fuel surcharges; total loading volume was 2.293 million vehicles, up 6% year on year; and average bicycle revenue was 2,971 US dollars, up 8% year on year. Among them, multimodal transport performed the most, with revenue surging 27% year on year to US$1,517 billion, container volume up 11% year on year; revenue from the industrial sector increased 14% year on year, and revenue from the bulk sector increased 10% year on year.

In terms of operational efficiency, labor productivity increased by 5% year on year, fuel consumption rate improved by 2%, truck turnover reached 228 miles per day, up 1% year on year, average terminal stay time 19.9 hours, up 2% year on year.

At the macro level, the geographical situation in the Middle East has driven diesel prices to continue to rise, making it the biggest pressure on the cost side; at the same time, high diesel prices have amplified the cost advantage of railways over road transportation, and the high growth in multimodal transport is reflecting the structural trend of “truck-to-rail”. The company's management said that despite mixed macroeconomic forecasts, the 6% increase in freight volume shows that the demand side is still resilient.

Performance Guidelines

Union Pacific maintains the EPS “high single digit” growth guide for the full year, in line with the three-year compound growth target of “high single digit to low double digit” by 2027; the capital expenditure plan was raised to 3.5 billion US dollars.

Jim Vena, CEO of the company, said: “The third quarter results demonstrate our ability to safely deliver the services our customers need while efficiently handling the 6% increase in volume. We look forward to next steps in the US Ground Transportation Board (STB) merger review to deliver the value of America's first transcontinental railroad to our customers.”

Additionally, the company declared a quarterly dividend of $1.42 per share, an increase of 3% year over year.