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3/25/2003



Rail News: Rail Industry Trends

Rising fuel prices, falling consumer confidence to take bite out of quarterly earnings, UP says


Union Pacific Railroad expects to report lower first-quarter earnings per share compared with first-quarter 2002 because of escalating fuel prices exacerbated by the Iraqi conflict and softening consumer demand.


Diesel prices will add about $130 million to the railroad's quarterly operating expenses, reducing earnings about 30 cents per diluted share, according to a prepared statement.


"Average diesel prices for the quarter are almost 40 cents per gallon more than we paid a year ago," said UP Chairman and Chief Executive Officer Dick Davidson. "[And] we have not experienced the growth we'd expected, particularly in March, which is typically the strongest month of the quarter."


The weak quarter also might impact UP's 2003 goal of 5 percent to 10 percent earnings growth compared with 2002.


"It appears that high fuel prices and economic weakness in the first half of the year will [be] a challenge," said Davidson. "I'm hoping that a quick and positive outcome to the war in Iraq will restore consumer confidence, strengthen the economy and continue to drive fuel prices lower."












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