OMAHA, Neb. (AP) — Union Pacific Corp. says its third-quarter profit declined 5 percent because the railroad hauled 6 percent less freight and coal demand remained weak.
The Omaha, Nebraska-based railroad said Thursday that shipping rate increases of about 3.5 percent and cheap fuel couldn’t offset the decline in volume. Automotive shipments, which were up 5 percent, were the only ones to increase in the quarter.
Union Pacific reported net income of $1.3 billion, or $1.50 per share, for the latest quarter. That’s down from last year’s $1.37 billion, or $1.53 per share.
The railroad’s profit topped the $1.43 per share that the analysts surveyed by Zacks Investment Research expected.
But Union Pacific’s revenue of $5.56 billion fell short of the $5.65 billion revenue that Wall Street expected.
Union Pacific CEO Lance Fritz said the railroad is making progress in cutting costs to meet current demand.
The railroad had about 2,700 employees furloughed or working reduced schedules at the end of September, up from about 1,200 at the end of June.
Union Pacific also parked 140 more locomotives in the quarter because of the weak demand.
Citi Investment Research analyst Christian Wetherbee said Union Pacific’s efforts to control costs helped the railroad deliver better-than-expected profits.
Railroad executives said energy prices, consumer demand, grain markets and the strength of the U.S. dollar will all affect shipping demand going into next year.
Chief Financial Officer Rob Knight said the railroad expects to fall short of last year’s fourth-quarter and full-year results because of difficult comparisons. Last year, Union Pacific’s fuel surcharges generated more revenue, and a number of shippers moved up intermodal shipments ahead of labor problems at West Coast ports.
Union Pacific’s shares gained $2.25, or 2.4 percent, to $95.67 in morning trading Thursday.
Union Pacific shares have decreased 22 percent since the beginning of the year, while the Standard & Poor’s 500 index has declined almost 2 percent. The stock has dropped 14 percent in the last 12 months.
Union Pacific operates 32,400 miles of track in 23 states from the Midwest to the West and Gulf coasts.
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Online:
Union Pacific Corp.: www.up.com
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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on UNP at http://www.zacks.com/ap/UNP
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Keywords: Union Pacific, Earnings Report, Priority Earnings
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