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Rail News: Financials

UP projects Q3 earnings increase


The slumping automotive industry and after-effects of hurricanes Gustav and Ike might have impacted Union Pacific Railroad's third-quarter traffic volumes, but they won't impact the bottom line. The Class I expects strong operating efficiency and lower-than-anticipated diesel fuel costs to more than offset the traffic dip. It projects earnings of $1.28 to $1.33 per share, or 28 to 33 percent higher than third-quarter 2007's earnings.

UP originally had projected quarterly earnings to total $1.10 to $1.20 per share.

The railroad's traffic volumes are down almost 5 percent year over year — below original projections of 1 to 2 percent lower — because of fewer shipments of finished vehicles, automotive parts and intermodal containers. Damage and power outages resulting from the hurricanes also have halted production lines for some of UP's customers.

But the quarterly average fuel price is expected to total about $3.70 per gallon, below UP's original forecast of $4 per gallon. The Class I also is working to improve operational performance by increasing network velocity and improving terminal dwell times. Average train speed is up more than 10 percent year over year.

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More News from 9/23/2008