(The Associated Press distributed the following article on March 1.)
OMAHA, Neb. — Union Pacific Corp. said Monday it won’t meet its earnings forecast for the first quarter because of an adverse $30 million court judgment, severe winter weather, high fuel costs and a crew shortage.
Union Pacific, owner of the nation’s largest railroad, had earlier expected 30 percent to 40 percent growth over the 57 cents per share it earned from continuing operations recorded in last year’s first quarter, chairman and chief executive Dick Davidson said.
That would have meant Union Pacific expected to earn between 74 cents and 80 cents a share for the three months ended March 31. Analysts surveyed by Thomson First Call were expecting earnings of 78 cents a share.
But Davidson said the company won’t meet the lower end of its projection and offered no guidance on what to expect.
“As we look to the remainder of the quarter, our outlook is unclear,” Davidson said.
The economy continues to improve, more train crews are being hired and March traditionally is the railroad’s strongest month for first quarter revenue, Davidson said.
“We’re looking for better days,” Davidson said.
The Arkansas Supreme Court on Thursday upheld a $30 million judgment against the railroad for a 1998 grade crossing accident that injured a man. The man’s family sued, saying the railroad had been told the crossing was unsafe but did not adequately clear brush along the tracks.
The railroad might appeal to the U.S. Supreme Court, Davidson said. But the expense of the verdict, including $5.4 million in interest, will be recorded in the first quarter ending March 31, Davidson said.
The judgment will cost the company about 8 cents a share, Davidson said.
Heavy snow and severe cold this winter have hampered service at the railroad, which covers 23 states in the western two-thirds of the country.
“We have winter every year, but this is one for the record books,” Davidson said.
Salt Lake City and other areas have had heavy snow this year, affecting rail traffic beyond northern lines that primarily carry coal and hampering the entire network, including delivery of automobiles, toys and other goods, Davidson said.
“We really got hammered right in our jugular vein, so it really affected everything else,” Davidson said.
However, demand for the railroad’s service is growing as the economy improves and by the end of the first quarter Union Pacific plans to have added 1,000 people to its train crews, Davidson said.
Union Pacific’s stock fell $1.13, or 1.8 percent, to close at $62.51 on the New York Stock Exchange.