(Union Pacific issued the following news release on July 20.)
OMAHA, Neb. — Union Pacific Corporation today reported second quarter 2006 net income of $390 million or $1.44 per diluted share, compared to $233 million, or $.88 per diluted share in the same quarter last year. Operating income during the second quarter of 2006 was $717 million, up from $468 million reported in the second quarter of 2005.
“Quarterly operating income was the best ever in the history of the railroad,” said Jim Young, President and Chief Executive Officer. “Reaching this milestone so early in the year is a clear indication that the demand environment remains very strong, and that we are moving volume more efficiently. The accomplishment I’m most pleased with is that we converted strong demand and yield gains into our best operating ratio in over two years. In addition, customers are seeing our service reliability improve.”
Second Quarter 2006 Overview
Quarterly operating revenue was an all-time record $3.9 billion compared to $3.3 billion in the second quarter of 2005.
Commodity revenue set an all-time quarterly record, up 17 percent to $3.7 billion. This compares to $3.2 billion in the second quarter of 2005 and was driven by improved yields, higher fuel surcharge recoveries and a 5 percent increase in volume.
The second quarter 2006 operating ratio improved to 81.7 percent compared to 86 percent in 2005. This was the best operating ratio in over two years.
The Railroad’s average quarterly fuel price increased 29 percent versus the year ago quarter, from $1.67 per gallon in 2005 to $2.15 per gallon in the second quarter of 2006. The fuel surcharge recovered 80 percent of the cost in excess of the Railroad’s $.75 per gallon base fuel price.
Employee productivity, as measured by gross ton-miles per employee, gained 3 percent versus the year ago quarter.
In the face of record volume, operating metrics remained stable. Average terminal dwell time increased slightly and average quarterly train speed remained flat versus a year ago.
Second Quarter Railroad Commodity Revenue Summary versus 2005
Agricultural up 22 percent
Automotive up 18 percent
Chemicals up 17 percent
Intermodal up 16 percent
Energy up 16 percent
Industrial Products up 15 percent
Looking Forward
“We expect the volume strength we saw in the first half of the year to continue through the upcoming peak shipping season,” Young said. “The biggest challenge ahead for us will be to continue to make progress on our operating initiatives, productivity and service reliability in the face of record volume.”
Union Pacific Corporation owns one of America’s leading transportation companies. Its principal operating company, Union Pacific Railroad, links 23 states in the western two-thirds of the country and serves the fastest-growing U.S. population centers. Union Pacific’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Energy, Industrial Products and Intermodal. The railroad offers competitive long-haul routes from all major West Coast and Gulf Coast ports to eastern gateways. Union Pacific connects with Canada’s rail systems and is the only railroad serving all six major gateways to Mexico, making it North America’s premier rail franchise.