OMAHA, Neb. — Union Pacific Corp., North America’s biggest railroad operator, on Thursday outran investor forecasts with strong quarterly profits credited to cost cutting and a broad, encouraging pickup in rail cargo revenues, a wire service reported.
The Omaha, Nebraska firm, which also owns major trucker Overnite Transportation, said in a news release that net income for the second quarter rose to $304 million, or $1.15 a share, from $243 million, or 95 cents, a year earlier.
Wall Street had expected Union Pacific to earn between $1 and $1.10 a share, with a consensus forecast of $1.08, according to 10 analysts surveyed by Thomson First Call.
Operating revenues were $3.154 billion, up 5 percent from $2.998 billion during April, May and June of 2001.
“Five of our six commodity groups posted improved revenue this quarter,” Chairman and Chief Executive Dick Davidson said. “While this highlights the strength of our diverse commodity mix and competitive product offerings, it’s also a signal to me that there are rays of light coming through the clouds that have been over the American economy for months.”
Rail revenue carloads rose 5 percent from a year earlier and bested a 3 percent improvement posted in this year’s first quarter.
Intermodal shipments, which are cargoes transported by a mix of trains, trucks or ship, were up 11 percent, in part because of an overall pickup in U.S. economic activity after a short recession. Industry sources said intermodal shipments were helped late in the second quarter because of worries about a possible longshoremen’s strike at western U.S. ports.
Automotive loads rose 8 percent, chemicals increased 4 percent, agricultural products rose 3 percent and industrial products moved up 2 percent, Union Pacific said.
Only energy shipments, such as coal, weakened, dropping 1 percent at Union Pacific, which operates 33,000 miles of rail, mainly in the western United States.
Union Pacific said Overnite’s operating income rose 2 percent to $18.3 million.
The company said its operating ratio, a closely watched measure of operating expenses as a percentage of revenues, improved three percentage points to 79.3 percent.
“Clearly, we have momentum in all aspects of our business. The railroad leveraged increased revenue, employee productivity gains and lower fuel prices into records for operating income, net income, and operating ratio,” Davidson said.
Union Pacific shares, which have risen on wavering investor optimism about the U.S. economy, closed on Wednesday at $59.32, up $1.17, on the New York Stock Exchange. Union Pacific is up about 2 percent so far in 2002, more or less in line with other railroads, but far ahead of a 22 percent loss in the Dow Jones U.S. Total Market Index.