(The Associated Press circulated the following on January 25.)
OMAHA, Neb. — Union Pacific Corp.’s 64 percent jump in fourth-quarter profit may have pleased investors, but it didn’t definitively settle the question of which railroad is the nation’s largest.
Union Pacific said Thursday it earned $485 million, or $1.78 per share, during the quarter that ended Dec. 31. That’s up from $296 million, or $1.10 per share, in the same period a year earlier.
Union Pacific and competitor Burlington Northern Santa Fe Corp. have sparred for years over which one should be known as the nation’s largest railroad. Earlier this week, Burlington Northern renewed the argument when its earnings report revealed it was the nation’s largest railroad by freight revenue in the third quarter of 2006.
Union Pacific held the edge in fourth-quarter freight revenue with $3.78 billion, compared with Burlington Northern’s $3.77 billion. Burlington Northern’s claim also doesn’t consider total revenue, where Union Pacific also held the edge, $3.96 billion to $3.88 billion, in the fourth quarter.
The rest of the U.S. railroad universe includes CSX Corp., which reported $2.4 billion in revenue in the fourth quarter to remain No. 3, Norfolk Southern Corp., which had $2.32 billion in revenue, and Canadian National Railway Co., which had $1.64 billion in revenue. Canadian Pacific Railway Ltd. doesn’t report earnings until Tuesday.
But Union Pacific spokeswoman Kathryn Blackwell said those revenue figures shouldn’t matter. She said the Omaha-based railroad bases its claim to be the nation’s largest on the 32,400 miles of track it operates. Burlington Northern remains close by that measure, too, with about 32,000 miles of track.
The dispute may ultimately matter more to railroad buffs than corporate executives.
“At the end of the day, it’s not important to me,” said Jim Young, Union Pacific’s president and chief executive. “What’s most important is looking at your service, your profitability, where you’re going with the direction of the company.”
Burlington Northern spokesman Pat Hiatte said his company is more concerned about improving its own performance than comparing itself with competitors.
“That’s really the focus: customer service and meeting the transportation needs of the country,” Hiatte said.
The dispute doesn’t concern analysts either. They say investors should care more about which railroad is most profitable, not which one is bigger.
“I don’t think it matters one iota who is larger,” said Randy Cousins, an analyst with BMO Capital Markets.
In the arena of profits, Fort Worth, Texas-based Burlington Northern was the leader last year with $1.89 billion to Union Pacific’s $1.61 billion.
Regardless of which railroad is bigger, both Union Pacific and Burlington Northern reported strong performances this week.
Union Pacific’s earnings of $1.78 per share in the fourth quarter surpassed the expectations of analysts polled by Thomson Financial, which had forecast a profit of $1.57 per share.
Union Pacific officials said greater efficiencies and strong demand for the coal and agricultural products it ships helped boost profits. It posted improved revenue in five of its six business groups, led by 20 percent increases from shipping agricultural and energy-related commodities. Revenue from industrial products fell slightly.
The company also said its operating ratio, or the ratio of operating expenses to revenue and a key measure of efficiency for railroads, improved to 79.6 percent from 85.3 percent in 2005. Railroads typically target an operating ratio of 80 percent.
Burlington Northern reported Tuesday that earnings rose 21 percent in the fourth quarter.
Union Pacific officials predict revenue growth in 2007 of 6 percent to 7 percent and growth in earnings per share of 10 percent to 15 percent.
On Tuesday, Burlington Northern officials forecast a 7 percent to 8 percent rise in freight revenue in 2007 and earnings per share percentage growth in the low teens.
Union Pacific’s shares lost 47 cents to close Thursday at $96.49, while Burlington Northern’s shares lost $1.01 to close at $78.28. Both stocks trade on the New York Stock Exchange.