Union Pacific overcame higher fuel costs to record a 24 percent jump in first-quarter profit by hauling more freight in the recovering economy and increasing prices on some shipping contracts, the railroad said Wednesday.
The nation's largest railroad reported $639 million in net income, or $1.29 per share. That's up from $516 million, or $1.01 per share, last year.
Revenue grew 13 percent to $4.49 billion from $3.97 billion a year ago as the railroad increased prices 4.5 percent and volume grew by 5 percent.
On average, analysts surveyed by FactSet expected Union Pacific to report earnings of $1.31 per share on $4.412 billion in revenue.
Union Pacific's results are considered a barometer of the overall economy, because of the wide range of products it carries; including crops, chemicals, cars and lumber.
Railroad CEO Jim Young said the economic outlook remains somewhat uncertain because prolonged higher fuel prices could hurt consumer spending, but he remains confident about Union Pacific's prospects.
"The economy is showing signs of continued, gradual improvement, and we're optimistic about the growth opportunities ahead," Young said.
About 820 Union Pacific employees remained furloughed in mid-April, down from 2,800 a year ago and 4,500 in 2009. The railroad has been gradually hiring back employees as shipping volumes improved.
Young said he expects to have all those furloughed employees back at work by the fall if the economy continues growing.
The railroad's fuel costs soared 42 percent to $826 million in the first quarter from $583 million in the 2010 quarter. The average price Union Pacific paid per gallon of diesel jumped 33 percent to $2.88.
Overall expenses grew 13 percent to $3.35 billion in the quarter.
Union Pacific has about 26,000 railcars and 800 locomotives stored. That compares with 38,000 railcars and 1,330 locomotives stored. In 2010, and 66,000 railcars and 1,900 locomotives stored in 2009.
Union Pacific hauled about 172,000 carloads a week during the first quarter, an improvement from a year ago. The railroad's track network can handle about 200,000 carloads a week.
Shipping volume increased 5 percent across all six sectors of Union Pacific's business. The biggest volume increases came in the chemicals and industrial segments, which grew 10 percent and 9 percent respectively. All of Union Pacific other business sectors _ agriculture, automotive, energy and intermodal _ reported 4 percent increases in volume.
Young said the aftermath of last month's tsunami in Japan will hurt shipments of finished vehicles and auto parts, but the railroad expects most of the impact will be in the second quarter of this year. And the decline in imported vehicles might be partly offset by increased vehicle shipments from U.S.-based carmakers.
The railroad said it plans to invest $3.2 billion in its network this year, including nearly $1.1 billion on projects designed to expand its shipping capacity. Union Pacific's capital spending plan for this year is significantly higher than last year's $2.5 billion spending.
Union Pacific, based in Omaha, Neb., is the nation's largest railroad with 32,400 miles of track crossing 23 states from the Midwest to the West and Gulf Coasts.
Union Pacific shares fell $1.25 to close at $96.07.
Union Pacific Corp.: http://www.up.com