Union Pacific lowers earnings forecasts

Union Pacific lowers earnings forecasts Union Pacific Corp., owners of North America’s largest railroad Union Pacific, has lowered its fourth quarter earnings expectations by 20 cents per diluted share, due primarily to rapidly rising diesel fuel costs and a lag in fuel surcharge recoveries.
   The company’s fourth quarter earnings are now expected to be in the range of $1.70 to $1.80 per diluted share, a reduction from the original forecast of $1.90 to $2.00 per diluted share. Full year 2007 earnings expectations are similarly impacted and are now in the range of $6.76 to $6.86 per diluted share.
   Union Pacific said its fuel costs for the fourth quarter are expected to be more than $200 million higher than the same period in 2006 with diesel averaging roughly $2.60 per gallon, a 34 percent increase from last year's fourth quarter level. On average, there is a two-month lag in the company's fuel surcharge programs between diesel fuel expense and surcharge recovery.
   Winter storms have also softened carloadings in recent weeks and Union Pacific predicted less than 1 percent volume growth for the quarter.
   “Given the ongoing economic uncertainty, lingering weather challenges and the year-end holidays, it's difficult to estimate volume growth in these last few weeks of the year,” said Jim Young, Union Pacific’s chairman and chief executive officer. “Despite these near-term challenges, Union Pacific's long-term opportunities remain strong as our productivity and service initiatives continue to gain momentum.”