By Tess Stynes 

Union Pacific Corp. said its fourth-quarter earnings fell 22% as the railroad operator continued to face weak freight demand, especially for coal, which offset benefits from higher prices and cost-cutting efforts.

The Omaha, Neb., company's shares fell 1.5% to $72.50 in recent premarket trading as per-share earnings and revenue missed expectations.

The rail industry has been under pressure from lower commodities prices that have weighed on demand for coal, a key market. The sector also is facing increased competition from trucks, as lower fuel prices make hauling containers and trailers less expensive. Companies, including Union Pacific, have mothballed locomotives and furloughed workers to curb costs.

For the three months ended Dec. 31, Union Pacific's total freight volume fell 9.1% amid declines across all its sectors with the exception of automotive, which rose 7.7%. Coal shipments slumped 22% and industrial products volume dropped 16%.

Freight revenue decreased 16% to $4.86 billion amid the weaker freight volume and a decline in fuel surcharges.

Chairman and Chief Executive Lance Fritz said the economy, uncertainty in the energy markets, commodity prices, and the strength of the U.S. dollar will continue to have a major impact Union Pacific's business this year.

Overall, Union Pacific reported a profit of $1.12 billion, or $1.31 a share, down from $1.43 billion, or $1.61 a share, a year earlier. Revenue decreased 15% to $5.21 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.42 and revenue of $5.45 billion.

The company's operating ratio rose to 63.2 % from 61.4%.

Last week CSX Corp. reported that its fourth-quarter revenue fell 13% as lower coal volumes continued to weigh on its performance. Kansas City Southern is set to report its results on Friday, and Norfolk Southern Corp. plans to release its earnings on Jan. 27.

Write to Tess Stynes at tess.stynes@wsj.com

 

(END) Dow Jones Newswires

January 21, 2016 08:46 ET (13:46 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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