Union Pacific railroad's 1Q profit up 35 percent

AP News
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Posted: Apr 19, 2012 9:15 AM
Union Pacific railroad's 1Q profit up 35 percent

Union Pacific's first-quarter profit soared 35 percent as the railroad increased prices and collected more fuel surcharge fees.

The Omaha-based company said Thursday that its revenue grew 14 percent to $5.11 billion from last year's $4.5 billion even though the number of carloads it hauled grew only 1 percent.

That revenue growth helped the nation's largest railroad generate $863 million in net income, or $1.79 per share, in the quarter that ended March 31. That's up from $639 million, or $1.29 per share, a year earlier.

The results topped Wall Street expectations. On average, analysts surveyed by FactSet expected Union Pacific to report earnings of $1.64 per share on $4.98 billion revenue.

Shares gained $2.40, or more than 2 percent, to $112.05 in premarket trading.

The railroad said it hauled 15 percent more automotive shipments and 10 percent more industrial products carloads. But the number of energy carloads fell 8 percent because of weak coal demand after a mild winter.

The current low natural gas prices will also hurt demand for coal to fuel power plants because some utilities have the ability to rely more on natural gas for electricity. Energy shipments accounted for 22 percent of Union Pacific's revenue last year, so it's an important business for the railroad. The company says its five other business sectors can help make up for the drop in coal demand.

"With a strong first quarter behind us, we're focused on the prospects that lie ahead," Union Pacific President and CEO Jack Koraleski said. "Although softer coal demand remains a challenge, the benefits of our diverse franchise should support continued opportunities in other markets, driving record financial results for the year."

Koraleski was named acting president and CEO last month because Jim Young is battling pancreatic cancer. Young remains Union Pacific's chairman.

Union Pacific has 32,400 miles of track crossing 23 states from the Midwest to the West and Gulf Coasts.

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Online:

Union Pacific Corp.: http://www.up.com