Loading blog posts...
October 24, 2025 • 4 min read
Union Pacific (UNP), one of North America's largest railroad operators, recently released its financial results for the third quarter of 2025. In this post, we'll dive into the numbers from its latest 10-Q filing with the SEC to understand the company's performance, what's driving its revenue, and how efficiently it's running its vast network.
For the three months ending September 30, 2025, Union Pacific reported total operating revenues of $6.24 billion, a 3% increase from the same period last year. This top-line growth translated to a healthier bottom line, with net income rising to $1.79 billion, or $3.01 per diluted share, up from $1.67 billion, or $2.75 per share, in Q3 2024.
To better visualize how the company's revenue flows through its costs to generate profit, the following chart breaks down the key components of the income statement.
Please log in to view diagrams.
In the chart above, the "Other Revenue" category primarily consists of income from Union Pacific's other subsidiaries, along with accessorial revenues—fees for services like demurrage (when a railcar is held by a customer beyond the allotted free time) and storage. On the expense side, "Other Segment Items" includes costs not directly assigned to a single freight group, such as casualty costs, state and local taxes, and general overhead expenses.
Union Pacific's freight revenue is divided into three main commodity groups: Bulk, Industrial, and Premium. Their performance in the third quarter was a mixed bag, highlighting shifting economic demands.
Bulk Shines: The Bulk segment, which includes grain, coal, and fertilizer, was the star performer, with revenues jumping 7% to $1.93 billion. This was largely driven by a 16% surge in Coal & renewables revenue and a 6% increase in Grain & grain products, reflecting strong demand in the energy and agriculture sectors.
Industrial Stays Strong: The Industrial segment, carrying products like chemicals, plastics, metals, and lumber, saw a solid 3% revenue increase to $2.19 billion. Growth was consistent across most categories, led by an 8% rise in Industrial chemicals & plastics.
Premium Stumbles: The Premium segment, comprising automotive shipments and intermodal containers (goods transported in the same container via multiple modes of transport, e.g., ship and rail), saw revenues dip 2% to $1.80 billion. A 5% drop in intermodal carloads was the primary cause. This segment is often seen as a barometer for consumer spending and retail inventory levels, making its decline a key area to watch.
While revenues grew, Union Pacific also demonstrated impressive cost control and operational improvements. Total operating expenses rose by a modest 1% to $3.70 billion, meaning revenue grew faster than costs—a recipe for higher profitability.
This efficiency is best captured by the operating ratio, a key industry metric that measures operating expenses as a percentage of revenue. A lower number is better. Union Pacific's operating ratio improved to 59.2% from 60.3% a year ago.
This improvement wasn't just on paper; it was reflected on the tracks:
These metrics show that the railroad is moving more goods, faster, and with less downtime, directly contributing to its improved profitability.
Union Pacific's third-quarter results paint a picture of a company firing on most cylinders, with strong performance in its core commodity-hauling businesses and significant gains in operational efficiency. However, the softness in the intermodal segment suggests potential headwinds related to consumer demand.
Perhaps the biggest news on the horizon is the company's pending acquisition of Norfolk Southern, a major competitor in the Eastern United States. In connection with this massive undertaking, Union Pacific has paused its share repurchase program. The successful integration of such a large acquisition, while navigating a complex economic environment, will be the central challenge and opportunity for the company going forward.
Last updated: October 24, 2025