The Omaha, Neb.-based railroad company reported earnings of $2.15 a share, beating analysts' estimates of $2.10 a share. Revenue rose 9.6% to $5.93 billion, which also surpassed forecasts calling for $5.91 billion, according to FactSet.
Revenue was up across all four business segments, most notably in premium and industrial, said TD Securities Inc. analyst Cherilyn Radbourne.
"While we reported solid financial results, we did not make the service and productivity gains that we expected during the quarter," said Lance Fritz, Union Pacific chairman, president and chief executive officer. "However, we are making progress implementing our new Unified Plan 2020 and we are well positioned to drive improvement going forward."
Radbourne noted that the new Unified Plan 2020 includes a planned workforce reduction.
Union Pacific plans to lay off about 500 workers before year-end, according to the Wall Street Journal, which reviewed an internal memo. The company also plans to eliminate 200 contract jobs as part of its effort to reduce its general and administrative support structure and improve efficiency.
Union Pacific also said its operating ratio, a key metric for Wall Street, was flat at 61.7%.
"Looking ahead, the company expects volume and pricing gains in 2019, accompanied by at least $500 million of productivity improvement, a 60% operating ratio by 2020, and capex less than 15% of revenue," Radbourne said.
Shares of Union Pacific rose 2.7% to $144.19. The stock has gained about 7.5% year to date.