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7/24/2003



Rail News: Financials

Record quarterly revenue can't offset UP's second-quarter fuel expenses



Between April and June, Union Pacific Railroad set a quarterly operating-revenue record at $3.3 billion, a 3 percent increase compared with $3.2 billion in second-quarter 2002.


But just as fuel prices put the squeeze on some other Class Is' quarterly earnings, diesel costs dampened UP's second-quarter financial performance.


On July 24, the railroad reported quarterly net income of $288 million, a 5 percent decrease compared with $304 million in second-quarter 2002, and flat operating income of $605 million compared with $602 million last year. Quarterly operating expenses of $2.7 billion increased 4 percent compared with second-quarter 2002's $2.6 billion.


"In a weak economic climate with carloadings flat compared to last year, this excellent revenue performance indicates the strength of our business
mix," said UP Chairman and Chief Executive Officer Dick Davidson in a prepared statement. "Although fuel surcharges contributed to our revenue growth, they did not fully mitigate the additional $54 million of fuel expense incurred due to a 16 cent-per-gallon increase in diesel prices from a year ago."


During the year's first half, UP earned $6.3 billion in operating revenue, up 3 percent compared with $6.1 billion during a similar 2002 period, but operating income fell 10 percent from $1.1 billion to $986 million. Operating expenses increased 7 percent from $5 billion to $5.3 billion.


UP's quarterly operating ratio worsened 0.5 points to 79.8 and its six-month ratio rose 2.7 points to 83.1.


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