Union Pacific posts downbeat quarterly results, says US regulator query "routine"

Adds details throughout and updates shares

By Apratim Sarkar

Jan 27 (Reuters) - U.S. railroad Union Pacific UNP.N reported fourth-quarter results below analysts' estimates on Tuesday, as volatile freight demand and sustained macroeconomic pressures strained its operations, while regulators review its proposed deal with Norfolk Southern NSC.N.

The company last year unveiled an $85 billion bid to acquire its smaller rival and create the first coast-to-coast U.S. freight railroad. The merger has drawn strong opposition from rail unions, who argue it threatens jobs and could raise costs for shippers.

The U.S. Surface Transportation Board sent the proposal back for revision earlier this month, citing missing information, as it applies tougher post-2001 competition rules.

Union Pacific played down the regulators' request, with CEO Jim Vena calling the move routine, despite expressing disappointment that regulators sought additional filings.

Vena said the regulators' move does not alter its expectations for the deal, adding that it still anticipates closing the transaction in the first half of 2027.

The railroad posted an adjusted profit of $2.86 per share for the quarter ended December 31, compared with analysts' average estimate of $2.87 per share, according to data compiled by LSEG.

It reported total operating revenue of $6.09 billion, below the estimate of $6.12 billion and forecast mid-single-digit earnings growth for 2026.

Shares of the railroad operator were up about 1% in afternoon trading.

JPMorgan analyst Brian Ossenbeck said Union Pacific is likely to underperform this year as weak volume expectations and rising inflation could limit its ability to improve margins through pricing.

Additionally, Union Pacific said a recent winter storm slowed trains across its network and raised costs for crew delays and lodging. It doesn't expect a material revenue hit, citing limited customer shutdowns and the ability to recoup lost volumes later in the quarter.

(Reporting by Apratim Sarkar in Bengaluru and additional reporting by Anshuman Tripathy; Editing by Shilpi Majumdar and Tasim Zahid)

((Apratim.Sarkar@thomsonreuters.com;))