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Rail News: Financials

UP sets annual and fourth-quarter revenue, income records

Make it five for five. Similar to the four Class Is that reported year-end financial results earlier this week, Union Pacific Corp. had a record-setting fourth quarter and 2006.

Quarterly revenue increased 9 percent to a record $3.8 billion and operating income jumped 52 percent to an all-time-high $810 million compared with fourth-quarter 2005 figures. Although industrial products revenue was flat, revenue increased in UP’s five other business groups: agricultural and energy, each up 20 percent; chemicals, up 9 percent; intermodal, up 4 percent; and automotive, up 2 percent. Average revenue per car increased 8 percent.

In addition, UP’s fourth-quarter operating ratio improved 5.7 points to 79.6, carloads increased 1 percent to 2.4 million units and net income jumped 64 percent to $485 million compared with fourth-quarter 2005 data. Plus, the railroad’s fuel consumption rate dropped to a fourth-quarter best 1.27 gallons per thousand gross ton-miles.

UP was able to rein in operating expenses, too. A 6 percent drop in fuel costs and 2 percent dip in equipment costs helped the Class I contain fourth-quarter expenses to $3.1 billion, up only 2 percent compared with fourth-quarter 2005’s expenses. The railroad’s average quarterly fuel price fell 14 cents to $1.94.

For the year, UP reported revenue of $14.9 billion, a new record and 15 percent gain year over year. The Class I also set an annual operating income record at $2.9 billion, up 61 percent compared with 2005.

In addition, UP’s operating ratio improved 5.3 points to 81.5, net income jumped 57 percent to $1.6 billion and carloads increased 3 percent to 9.9 million units. However, a 27 percent increase in materials and supplies spending, and 18 percent rise in fuel costs helped drive up annual expenses 8 percent to $12.7 billion compared with 2005.

“In 2006, we significantly improved our return on invested capital and laid the foundation for further operational and financial improvements,” said UP President and Chief Executive Officer Jim Young in a prepared statement. "While economic indicators are mixed, we are optimistic about what we see ahead for Union Pacific in 2007.”

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More News from 1/25/2007