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Rail News Home Financials


Rail News: Financials

UP registers quarterly best revenue, income and earnings


Despite a “fragile” economy and severe weather — including massive floods in the nation’s midsection, and a prolonged drought and heat wave in Texas — Union Pacific Corp. set three best-ever financial records in the third quarter, the Class I’s senior executives announced this morning during an earnings webcast and teleconference.

Operating revenue climbed 16 percent to an all-time quarterly best $5.1 billion, operating income rose 13 percent to a record $1.6 billion and diluted earnings per share jumped 19 percent to an all-time best $1.85 compared with third-quarter 2010 results. In addition, net income increased 16 percent to $904 million and volume rose 1 percent to 2.3 million units.

UP delivered strong top- and bottom-line results, and across-the-board growth because the company is deriving benefits from a diverse franchise, value-added services, improved productivity and reliable service performance, said Chairman, President and Chief Executive Officer Jim Young.

Each of UP’s six business groups registered freight revenue growth and four of them posted volume gains. In addition, average revenue per car rose 14 percent year over year.

Energy revenue jumped 21 percent to $1.1 billion and volume rose 7 percent to 572,000 units; intermodal revenue increased 8 percent to $948 million, but volume fell 6 percent to 848,000 units; industrial products revenue soared 24 percent to $863 million and volume rose 8 percent to 305,000 units; agricultural products revenue increased 9 percent to $814 million, but volume dipped 3 percent to 223,000 units; chemicals revenue climbed 14 percent to $720 million and volume increased 5 percent to 233,000 units; and automotive revenue jumped 23 percent to $379 million and volume climbed 10 percent to 160,000 units.

In the automotive sector, U.S. auto sales increased 6 percent in the quarter, and in the intermodal market, international business declined 12 percent while domestic business rose 2 percent, said Executive Vice President of Marketing and Sales Jack Koraleski.

The income and revenue gains notwithstanding, UP’s third-quarter operating ratio clocked in at 69.1, up 0.9 points compared with a quarterly best 68.2 ratio in third-quarter 2010. Fuel costs — which shot up 51 percent to $916 million — posed a 1.7-point headwind to the operating ratio, said EVP and Chief Financial Officer Rob Knight.

Fuel costs also accounted for more than half of an overall increase in operating expenses, which rose 17 percent to $3.5 billion, said Knight. The average fuel price per gallon climbed from $2.24 in the year-ago period to $3.18. In addition, compensation and benefit costs increased 9 percent to $1.2 billion primarily because of inflation, training costs and a 5 percent rise in headcount from 43,375 in the year-ago period to 45,507.

Looking ahead through the remainder of 2001 and beyond, the economy’s and business growth’s “slow trajectory” likely will continue, said Koraleski.

Jeff Stagl

Contact Progressive Railroading editorial staff.

More News from 10/20/2011