(The Associated Press circulated the following article on March 22.)
OMAHA, Neb. — Union Pacific Corp., which operates the nation’s largest railroad, raised its earnings estimate for the first quarter, citing unexpectedly strong revenue growth and a quick recovery from West Coast storms. Its shares rose 5 percent.
Earnings should range from 43 cents to 48 cents a share for the period ending March 31, the company said Tuesday. That is up from previous estimates of 25 cents to 35 cents a share. Analysts surveyed by Thomson First Call had expected earnings of about 35 cents a share based on estimates Union Pacific issued in January.
Union Pacific’s shares rose $3.28, or 5 percent, to close at $69.35 in Tuesday trading on the New York Stock Exchange. The stock has risen from a 52-week low of $54.80 in early August and above its high of $67.68 for the year.
Revenue should be up about 8 percent in the first quarter compared with last year, versus 4 percent to 6 percent previously forecast, Union Pacific officials said. Carload volumes are expected to increase 1 percent, with higher yield and fuel surcharges responsible for the rest of the projected revenue increases.
Fuel prices have been higher than expected, however, averaging about $1.43 a gallon in the first quarter compared with projected costs of $1.30 to $1.35 per gallon, Union Pacific officials said.
January storms that blocked key rail lines on the West Coast cost the company about $115 million in expenditures and lost business, about $85 million less than the projected $200 million, Union Pacific chairman and chief executive Dick Davidson said. Some of that loss also will be covered by insurance.
“The men and women of Union Pacific exceeded all expectations by getting our operations back in service so quickly and minimizing the impact the disruption had on our overall network performance,” Davidson said.
First quarter income will be affected by efforts to improve delivery on its rails, Union Pacific said. Unexpectedly high demand and insufficient numbers of crews and locomotives has snarled Union Pacific’s 23-state network for more than a year, and the company has hired more people and added locomotives to its fleet.
Union Pacific also announced in January that it would charge higher prices, turn down less profitable business and increase the number of its nonstop trains. The program is being implemented in the first half of the year and results should begin to show in the second half, the railroad said.