Union Pacific Corp. today shared some very encouraging financial performance news for 2013 — the Class I not only posted solid fourth-quarter and full-year results, but some of its best-ever quarterly and full-year results.
In the fourth quarter, the railroad set three records: diluted earnings per share, which climbed 16 percent year over year to $2.55; operating revenue, which rose 7 percent to $5.6 billion; and operating income, which jumped 14 percent to $1.97 billion. In addition, net income increased 13 percent to $1.17 billion and UP's operating ratio improved 2.1 points to 65. The ratio was only 0.2 points off the all-time quarterly record of 64.8 set in third-quarter 2013, UP officials said in a press release.
Moreover, volume ratcheted up 2 percent to 2.3 million units — the first time the railroad's traffic increased in six quarters — despite weaker coal volume, they said. Coal traffic declined 10 percent to 419,000 units.
The volume gain "highlights the strength of our diverse franchise, the extensive network reach we have to various markets, and a strong grain harvest," said UP President and Chief Executive Officer Jack Koraleski. "Volume growth, combined with solid core pricing gains and our continued focus on safety, service and efficiency, generated a record fourth quarter operating ratio. The fourth quarter wrapped up another tremendous year for Union Pacific, with our overall financial performance exceeding all previous milestones."
A breakdown of revenue generated by business sector shows agricultural products up 19 percent to $937 million, automotive up 17 percent to $544 million, industrial products up 14 percent to $954 million, chemicals up 3 percent to $855 million, intermodal flat at $1 billion and coal down 1 percent to $985 million.
In terms of operating costs, total 4Q expenses increased 4 percent to $3.7 billion primarily because compensation and benefit expenses rose 7 percent to $1.2 billion and purchased services/materials expenses climbed 10 percent to $585 million.
For the full year, UP set four records: diluted earnings per share, which climbed 14 percent versus 2012 to $9.42; operating revenue, which rose 5 percent to $21.96 billion; operating income, which jumped 10 percent to $7.4 billion; and operating ratio, which improved 1.7 points to 66.1. Net income rose 11 percent to $4.4 billion and total operating expenses increased 2 percent to $14.5 billion.
After a strong 2013, 2014 could be another promising year for UP, said Koraleski.
"As we look at 2014, we see signs that the economy is slowly strengthening," he said. "We're well-positioned for economic growth and are confident in our ability to deliver on our customers' growing transportation needs."
This year will be a strong one capital spending-wise, as well. During their quarterly earnings presentation this morning, UP senior executives said the Class I's capex budget for 2014 will be larger than 2013's $3.6 billion spending plan. Dollars will be allocated to capacity projects in the Southern Region and for network strategies, as well as to locomotives and equipment, and positive train control implementation.
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