Union Pacific to miss margin forecast as costs mount

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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.