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Rail News Home Financials

1/19/2012



Rail News: Financials

UP pumped up profits and revenue, drove down operating ratio in 4Q


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Union Pacific Corp. capped off 2011 with record financial performance, including revenue that surpassed the $5 billion mark.

In the fourth quarter, the Class I set all-time quarterly records in operating revenue, which climbed 16 percent to $5.1 billion; operating income, which soared 23 percent to $1.6 billion; and diluted earnings per share, which jumped 28 percent to $1.99 compared with fourth-quarter 2010 results. In addition, carloads increased 3 percent to 2.3 million units, net income jumped 24 percent to $964 million and UP’s operating ratio stood at a fourth quarter-best 68.3, improving 1.9 points compared with the previous fourth-quarter record set in 2010.

"The dedicated efforts of our employees, combined with the strength of our diverse railroad franchise, drove record fourth-quarter results," said UP Chairman, President and Chief Executive Officer Jim Young in a prepared statement.

However, fourth-quarter operating expenses rose 13 percent to $3.5 billion, with higher fuel costs accounting for more than half of the year-over-year increase. Fuel expenses climbed 36 percent to $935 million as the average fuel price in the quarter rose 28 percent year over year to $3.16 per gallon. Higher fuel costs increased UP’s quarterly operating ratio by 0.8 points.

In addition, compensation and benefits expenses rose 4 percent to $1.1 billion and purchased services and materials costs increased 9 percent to $508 million.

For all of 2011, UP logged its most profitable year in the railroad’s history, which will reach the 150-year mark later this year. Operating revenue rose 15 percent to $19.5 billion, operating income increased 15 percent to $5.7 billion, net income climbed 18 percent to $3.3 billion and diluted earnings per share jumped 22 percent to $6.72 compared with 2010 results. Operating expenses rose 15 percent to $13.8 billion, with fuel costs the primary driver of the increase. The Class I’s full-year operating ratio inched up to 70.7 versus 2010’s 70.6 ratio, but excluding fuel costs, the ratio would be 1.7 points lower, UP officials said.

“Looking ahead, we expect continued slow but steady economic growth in 2012,” said Young, adding that UP’s prospects have never looked better. "The diversity of our unique railroad franchise will continue to provide growth opportunities in various markets.”


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