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Rail News: Financials

1Q: UP's results still show effects from operational woes


Along with cheers for setting another quarterly revenue record, Union Pacific Corp. officials expect to draw jeers for escalating expenses, falling income, slowing average train speed and a worsening operating ratio in the first quarter because of ongoing operational problems and severe January weather in southern California.

Today, UP reported record first-quarter operating revenue of $3.2 billion, a 9 percent increase compared with first-quarter 2004 and the fourth-straight quarter the railroad’s revenue has topped $3 billion. Quarterly revenue per car averaged $1,306 compared with $1,214 during the same 2004 period.

But quarterly operating expenses rose 10 percent to $2.8 billion, net income fell 22 percent to $128 million and the railroad’s operating ratio worsened 1 point to 90.1. Quarterly operating income dropped slightly to $313 million compared with $314 million in first-quarter 2004.

"Operationally, our performance has improved since the beginning of the year, but our earnings were impacted by the network challenges we continue to face as well as the West Coast storm — we estimate the storm adversely affected net income by approximately $34 million," said UP Chairman and Chief Executive Officer Dick Davidson in a prepared statement.

During the first quarter, UP paid an average fuel price of $1.45 per gallon compared with $1.02 per gallon in first-quarter 2004. Quarterly average train speed of 21.1 mph dropped 0.8 mph compared with the same 2004 period.

"Although we'll face daily challenges, we believe our network management initiatives are gaining traction and we will work to build on that momentum," said Davidson. "Demand for our services remains strong and our task is to leverage that strength into better bottom-line results.”

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More News from 4/21/2005