Railroad operator Union Pacific Corp. (UNP) on Thursday reported a 17% decline in profit for the fourth quarter from last year, as a decline in freight volumes due to the continued impact of the recession more than offset lower expenses.
However, quarterly earnings per share topped market projections. Looking ahead, the company noted that the economic picture for 2010 looked somewhat more favorable than it did a year ago.
The Omaha, Nebraska-based operator of the largest railroad in North America reported net income for the fourth quarter of $551 million or $1.08 per share, down from $661 million or $1.31 per share in the prior-year quarter. Net income, however, increased from $517 million or $1.02 per share in the preceding third quarter.
On average, twenty four analysts polled by Thomson Reuters expected the company to report earnings of $1.04 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter were $3.75 billion, down 12% from $4.29 billion in the same period last year, but up from $3.67 billion in the preceding second quarter. Analysts had a consensus revenue estimate for the quarter of $3.77 billion.
Union Pacific and the other major freight railroads are considered gauges of the nation's economic health as the volume of cars, chemicals, crops, and other goods they carry hints at the health of those industries. Among peers, Fort Worth, Texas-based Burlington Northern Santa Fe Corp. (BNI) is slated to release its earnings for the fourth quarter today. Analysts expect the company to post earnings of $1.22 per share for the quarter on revenues of $3.62 billion.
Jacksonville, Florida-based CSX Corp. (CSX) recently said Tuesday that its profit for the fourth quarter increased by 23% over last year, helped by lower expenses, notwithstanding a 13% decline in revenues. The company's net earnings for the fourth quarter were $305 million or $0.77 per share, up from $247 million or $0.63 per share in the prior-year quarter. Revenue for the quarter decreased 13% to $2.32 billion from $2.67 billion in the same period last year.
Union Pacific's freight revenues for the latest quarter declined 13% to $3.54 billion from $4.08 billion in the previous-year quarter as a result of lower volumes and a $320 million reduction in fuel surcharge revenue. Other revenues, however, increased 3% to $213 million from $206 million a year ago.
Total operating expenses for the quarter were $2.75 billion, down 12% from $3.15 billion in the prior-year period.
Operating income for the quarter totaled $1.00 billion, down 12% from $1.14 billion a year ago.
Business volumes for the quarter, as measured by total revenue carloads, were down 5% from last year and compares to a 15% decline in the preceding third quarter. Average revenue per car was down 9% from a year ago. Quarterly diesel fuel prices decreased 17% to an average of $2.05 per gallon from an average of $2.46 per gallon in the year-ago period.
Union Pacific's operating ratio improved to 73.3% from 73.4%, primarily due to ongoing efficiency initiatives and pricing gains that offset the impact of lower volumes.
Commenting on the results, Jim Young, Union Pacific chairman and chief executive officer, stated, "Union Pacific's fourth quarter earnings reflected the continued impact of the recession that began in 2008. In this difficult environment, we've continued to focus on running our business efficiently and improving customer service. As a result, we finished the year with new records in safety, service, customer satisfaction and efficiency."
Freight revenues dropped across all the six business segments of Union Pacific. Freight revenues from chemicals declined 7% year-over-year to $539 million, revenues from energy dropped 22% to $765 million.
Intermodal revenue was down 3% to $684 million. Intermodal freight transport involves the transportation of cargo in a container or vehicle that can be transferred to trucks or ships without any handling of the freight itself when changing modes.
In the quarter, revenues from the agricultural segment was down 7% to $738 million, automotive revenue edged down 1% to $302 million, and revenues from industrial products dropped 28% from last year to $513 million.
However, slightly stronger demand in the latest quarter led to an increase over soft prior-year volume levels in three of Union Pacific's business groups, namely, Intermodal, Agricultural and Automotive.
For fiscal year 2009, Union Pacific's net income fell 19% to $1.90 billion or $3.75 per share from $2.34 billion or $4.54 per share a year ago. Analysts expected the company to report earnings of $3.56 per share for the year.
Total operating revenues for the year declined 21% to $14.14 billion from $17.97 billion last year. Analysts expected revenues of $14.16 billion for the year.
Freight revenues for the year fell 22% to $13.4 billion from $17.12 billion a year ago. Operating income for the year was $3.39 billion, down 17% from last year.
Looking ahead, Young said, "Although still uncertain, the economic picture for 2010 looks somewhat more favorable than it did a year ago. We will continue executing Union Pacific's long-term strategy to improve safety, customer service, productivity and efficiency. Our network management initiatives and strategic growth investments should position us to take full advantage of new business opportunities."
In Thursday's regular trading session, UNP is currently trading at $67.07, up $3.34 or 5.24% on a volume of 200 shares. In the past 52 weeks, the stock has been trading between $33.28 and $68.66.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.