UP 3rd quarter earnings up 32%
Union Pacific Corp., North America's largest railroad by revenue, smashed Wall Street expectations Thursday, reporting a 32 percent increase in third quarter net income, despite what the firm describe as 'soft' freight demand.
The Omaha, Neb.-based Class I railroad reported net income rose to $703 million compared with $532 million, or $1 per share, in the third quarter of 2007.
Third quarter revenue was $4.85 billion, up 16 percent over $4.19 billion reported in the third quarter of 2007. Operating revenue climbed 21 percent to $1.2 billion.
The railroad's $1.38 per share earnings easily beat Wall Street expectations of $1.30 per share.
Increased rail rates boosted UP's average third quarter revenue per car to $1,931, up 22 percent over the third quarter last year.
UP said revenue increased in five out of six of the firm's commodity segments, led by shipments of agriculture products, up 27 percent to $848 million, and energy products, up 28 percent to $1.05 billion.
Declines in U.S. automobile production continued to put downward pressure on rail shipments of automobiles and related products, UP said, with revenue from automotive shipments falling 7 percent to $324 million. UP moved 2.4 million revenue carloads in the quarter compared to 2.52 million carloads during the year-ago period. UP blamed the 5 percent decline in overall rail volumes on impacts from Hurricanes Gustav and Ike.
UP said fuel costs rose 44 percent to $1.13 billion, but the firm was able to offset a large portion of the impact through fuel surcharges passed along to customers.
Despite the continuing decline in the national and world economies, UP said it expects to produce strong year-over-year earnings growth in the fourth quarter. The firm predicted fourth-quarter volumes would decline about 5 percent, with 2009 volumes expected to be flat to down 2 percent. The firm expects pricing to remain strong, with 2009 rate hikes of 5 percent to 6 percent.
UP 3rd quarter earnings up 32%
