Union Pacific Corporation (UNP - Free Report) announced that its long-time chief financial officer (CFO) Rob Knight plans to retire on Dec 31, 2019. Knight has a long-term association of more than 20 years with the company and has been serving as its CFO since 2004.
In the said designation, he took the company to great heights, helping it reach the highest market capitalization among the transportation companies in North America. Under his tenure, operating ratio (operating expenses as a percentage of revenues) improved markedly. Notably, the metric improved 2.2 points to 61.6% in the first half of 2019. It is expected to further improve in the second half of the year. Union Pacific expects the 2019 operating ratio to be below 61%. The metric is further estimated to be lower than 60% by 2020, paving the way for an operating ratio of 55% in the long term. It is to be noted that lower the value of the operating ratio the better.
The company has named Jennifer Hamann, current senior vice president, Finance, as Knight’s successor effective Jan 1, 2020. Hamann will control every aspect of Union Pacific's financial activity for both Union Pacific Corporation and Union Pacific Railroad. She joined the company in 1992.
The company is currently seeing muted revenue growth, thanks to the sluggish freight scenario in the United States. With the company deriving majority of its revenues from freight, its top line slipped 1% year over year in the first half of 2019 due to a 2% dip in freight revenues.
Meanwhile, fellow railroad player CSX Corporation (CSX - Free Report) is struggling with soft intermodal revenues, which among other factors forced the company to trim its current-year top-line forecast.
However, its Canadian counterparts, namely Canadian National Railway Company (CNI - Free Report) and Canadian Pacific Railway Limited (CP - Free Report) have largely remained unaffected, courtesy of solid freight demand in the nation.
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