Union Pacific Corp. today reported that it set four records and made other financial strides in the fourth quarter primarily because its diverse portfolio, core pricing gains and more efficient operations helped offset significantly weaker coal and grain business.
The 4Q records include diluted earnings per share, which climbed 10 percent year over year to $2.19; operating revenue, which increased 3 percent to $5.25 billion; operating income, which rose 7 percent to $1.7 billion; and the operating ratio, which improved 1.2 points to 67.1.
"Although it was a challenging year on many fronts, 2012 was Union Pacific's most profitable year in our 150-year history," said UP President and Chief Executive Officer Jack Koraleski in a prepared statement. "It's a testament to the strength and diversity of our franchise, the dedication and commitment of our employees, and our unrelenting focus on creating value for our customers."
By commodity group, freight revenue in the quarter shot up 15 percent for chemicals (to $834 million), 14 percent for automotive ($466 million), 6 percent for intermodal ($1 billion) and 3 percent for industrial products ($835 million). Agricultural revenue ($785 million) declined 8 percent and coal revenue ($990 million) fell 7 percent compared with fourth-quarter 2011 totals. Overall revenue carloads decreased 2 percent to 2.24 million units.
In terms of operating costs, total expenses inched up 1 percent to $3.5 billion primarily due to increased purchased services/materials and depreciation costs. Compensation and benefit expenses declined 2 percent to $1.1 billion and fuel costs dipped 2 percent to $920 million.
For the full year, UP set five records: diluted earnings per share, which climbed 23 percent year over year to $8.27; operating revenue, which increased 7 percent to $20.9 billion; operating income, which shot up 18 percent to $6.7 billion; the operating ratio, which improved 2.9 points to 67.8; and the customer satisfaction index, which ratcheted up 1 point to 93.
Four of the Class I's six business groups reported freight revenue and volume growth versus 2011, but total carloadings were flat. Full-year operating expenses increased 3 percent to $14.2 billion.
For 2013, UP expects to encounter many of the same challenges it faced last year, said Koraleski.
"We successfully navigated through the complexities of 2012, and we'll continue to follow that same strategy going forward," he said. "We'll remain agile and leverage the strengths of our diverse franchise with a focus on creating value for our customers and generating strong returns for our shareholders again in 2013."
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