(Reuters circulated the following article on April 21.)
NEW YORK — Union Pacific Corp., the nation’s largest freight railroad, posted lower quarterly earnings on Thursday, hurt by high fuel costs and storms on the U.S. West Coast.
However, results were in line with the company’s recently raised forecast, and it offered a stronger-than-expected, second quarter profit outlook and raised its full-year sales growth projection.
The railroad, which suffered service disruptions last year when it was caught unprepared by record freight volumes, said first-quarter earnings fell to $128 million, or 48 cents a share, from $165 million, or 63 cents a share, a year earlier.
Revenue rose 9 percent to $3.15 billion on the back of strength in shipments of coal and industrial products.
In March, the company raised its first-quarter earnings forecast, saying winter storms on the West Coast had been less damaging than expected. It forecast earnings of 43 cents to 48 cents a share, and revenue growth of 8 percent.
Analysts, on average, had expected earnings of 47 cents per share on revenue of $3.13 billion, according to Reuters Estimates.
The company’s operating margin fell to 9.9 percent in the first quarter from 10.9 percent a year earlier, hurt by an increase in average fuel prices to $1.45 a gallon in the quarter from $1.02 last year.
Union Pacific said the West Coast storms reduced net profit by about $34 million in the first quarter.
Wall Street’s view of Union Pacific has been getting better in recent weeks. Analysts say the railroad is making improvements in its network after last year’s congestion problems.
Transport stocks have taken a beating in the last month amid a decline in freight volume and worry that high oil prices will slow economic growth.
But some analysts say railroads are insulated against a slowdown because demand for coal and agricultural products is less sensitive to overall strength in the economy.
Union Pacific forecast a second-quarter profit of 75 cents to 85 cents a share, above the average forecast of 73 cents among analysts polled by Reuters Estimates. The company sees sales in the quarter rising 10 percent to 11 percent.
It said it expects sales for the full year to rise 6 percent to 8 percent, with further upside possible. It previously projected 5 percent to 7 percent sales growth.
The company sees fuel prices of $1.55 to $1.65 per gallon in the second quarter and $1.40 to $1.50 a gallon for the year.