(The following article by Stacie Hamel was posted on the Omaha World-Herald website on June 29.)
OMAHA, Neb. — Despite better customer feedback and double-digit revenue growth in the second quarter, Union Pacific Railroad has not improved enough, its chairman and chief executive said Tuesday.
“We still aren’t nearly where we need to be,” Dick Davidson said. “We need to increase velocity by several miles per hour and reduce failure costs by several million dollars.”
The Omaha-based railroad will announce results July 21 for the quarter that will end Thursday. Davidson said revenue has grown about 10 percent from the second quarter of 2004 when the railroad recorded record revenue.
“It’s better growth than we’ve seen lately,” he said.
Growth of 10 percent would be the largest since the fourth quarter of 2003. Davidson said the increase has been driven by price increases for coal, construction material and import-export shipments. Volume is growing between 1 percent and 2 percent so far this year.
The company has not changed its April earnings forecast of 75 cents to 85 cents per share, Davidson said. That would be the first increase in six quarters, exceeding the $158 million, or 60 cents a share, in net income for last year’s second quarter.
The company’s Unified Plan for overhauling operations is showing good results, he said, with substantial decreases in the amount of time trains are held at terminals.
“It’s a question of time until we see velocity of our train speed move back up,” he said. “But we’re on the right track. I am confident our people are doing what we need to do to restore Union Pacific to where we need to be.”
(This report includes material from Bloomberg News.)