(The Associated Press circulated the following on July 18.)
NEW YORK — Union Pacific Corp. reports earnings for the second quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Union Pacific Corp. is the nation’s largest railroads, operating 32,400 miles of track in 23 states from the Midwest to the West and Gulf coasts. The railroad was created by a law enacted by President Abraham Lincoln in 1862.
At the start of the quarter, Omaha, Neb.-based Union Pacific lifted its embargo on new contracts for Wyoming coal, symbolizing the railroad’s plan to take on new coal customers for the first time in almost two years.
The railroad announced on March 30 it would invest $300 million to double the capacity of its Southern California container transfer facility over the next few years, as it kept up with the growing traffic from nearby ports.
Concerns grew later in the quarter over possible disruptions at two California ports, Long Beach and Los Angeles, where labor contracts were in dispute.
In mid-May, two Union Pacific freight trains derailed between Tacoma, Wash., and Olympia, Wash., disrupting Amtrak passenger rail service, although no one was injured.
Also in May, as expansion plans were underway in Arizona, the railroad was fined $56,000 because it worked on a major track expansion project without first getting state approval.
BY THE NUMBERS: The company expects to come in at the low end of its outlook range of $1.58 to $1.65 per share. Analysts polled by Thomson Financial, on average, are expecting a profit of $1.62 per share.
ANALYST TAKE: Stifel Nicolaus analyst John G. Larkin said volume has been weak throughout the quarter due to heavy rains and flooding in the Midwest and Powder River Basin _ a vast coal region in Wyoming _ and a continued slump in the industrial economy. Overall volumes were up slightly in June, though, as weather improved.
The company should report volume weakness in every freight category, he said, with grain and lumber likely the greatest discrepancies compared to last year.
However, pricing remains strong, and “network fluidity” appears to be improving. In addition, the company has prime positioning among coal, intermodal, automotive and chemical industries in the West, he said. Recent company initiatives also seem to be paying off, including a bottleneck elimination program, and terminal and operations improvements.
STOCK PERFORMANCE: The stock gained about 14 percent during the quarter and has risen 33 percent so far this year.