(The Associated Press distributed the following article on October 23.)
OMAHA, Neb. — High fuel prices continued to drain earnings for Union Pacific Corp., which reported a 27 percent drop in its third quarter profits.
The company that owns the nation’s largest railroad said Thursday that net income for the quarter ended Sept. 30 came to $317 million, or $1.21 per share. That compared with $437 million, or $1.63 per share, in the third quarter of 2002.
However, gains from a major real estate sale and a large tax settlement added 44 cents a share to third quarter earnings last year, Union Pacific chairman and CEO Dick Davidson said.
Higher fuel prices added nearly $50 million to the latest quarter’s expenses, Davidson added.
Despite the spike in fuel prices, Union Pacific claimed record revenue of $2.96 billion for the quarter ended Sept. 30 — a 4 percent increase over last year, Davidson said.
Increased business hauling agriculture, industrial and energy products led to that revenue boost, the company said.
Revenue from agriculture was up 10 percent for the quarter, while energy products was up 6 percent and industrial products was up 7 percent, the company said.
But revenue from chemical goods was flat and fell by 3 percent in both the automotive hauling, Union Pacific said.
Earnings for Union Pacific’s trucking company, Overnite Corp., fell 67 percent to 6 cents a share, from 18 cents a share in the third quarter last year.
Union Pacific announced in August that it planned to sell the trucking company through an initial public offering.
“Even in the face of some operational challenges, we leveraged Union Pacific’s diverse businesses into a solid revenue performance,” Davidson said.
“We’re fairly optimistic that we’ll see continued broad-based growth in our business and improving economic conditions as we round out 2003,” he added. “While we have been experiencing some operational difficulties in the second half of the year, we expect operations to improve throughout the fourth quarter.”
For its first nine months, Union Pacific had net income of $1.03 billion, a 7 percent increase from the $963 million for the same period a year ago.
Shares of Union Pacific gained $1.89 to close at $60.00 on the New York Stock Exchange.