Union Pacific to miss margin forecast as costs mount
2022.06.07 17:02
FILE PHOTO: A Union Pacific rail car is parked at the Canadian Pacific Railway (CP Rail) Toronto Yard in Scarborough, Ontario, Canada March 20, 2022. REUTERS/Chris Helgren
(Reuters) – Union Pacific Corp (NYSE:UNP) on Tuesday warned it would miss full-year margin targets as the railroad operator takes on rising costs related to fuel, wages and its network.
The Nebraska-based company’s incremental operating margin is expected to drop below the original forecast of mid-60%.
“Inflationary pressures beyond fuel have increased since the beginning of the year, and we now expect our all-in inflation to be around 4% for the full year,” Chief Financial officer Jennifer Hamann said at the UBS Global Industrials and Transportation Conference.
In April, Union Pacific flagged congestion on tracks that was hurting its ability to meet shipping demand and said cost per employee had increased 6%.
Hamann also said the company was unlikely to meet its forecast for a full-year operating ratio beginning with 55%, but it would improve from the previous year.
