(The Union Pacific Corp. issued the following news release on July 24.)
OMAHA — Union Pacific Corporation today reported second quarter net income of $288 million, or $1.10 per diluted share. This compares to net income of $304 million, or $1.15 per diluted share in the second quarter of 2002. Operating income was $605 million, compared to $602 million in 2002. The 2003 results include a one-time expense of $.03 per diluted share for costs associated with the $500 million redemption of the Corporation’s convertible preferred securities.
“This was our best quarter ever in terms of revenue. In a weak economic climate with carloadings flat compared to last year, this excellent revenue performance indicates the strength of our business mix,” said Dick Davidson, chairman and chief executive officer. “And, although fuel surcharges contributed to our revenue growth, they did not fully mitigate the additional $54 million of Railroad fuel expense incurred due to a $.16 per gallon increase in diesel prices from a year ago.”
Second Quarter Highlights
Union Pacific Corporation, excluding Overnite Corporation, reported second quarter operating income of $584 million compared to $583 million for the same period in 2002.
* Railroad Operating Revenue increased 3 percent
* Employee Productivity (gross ton-miles/employee) increased 4 percent to a second quarter record level
* Operating Margin was 20.2 percent, compared to last year’s second quarter 20.7 percent
Second Quarter Railroad Commodity Revenue Summary versus 2002
* Agricultural up 6 percent
* Energy up 6 percent
* Industrial Products up 5 percent
* Intermodal was flat
* Automotive down 2 percent
* Chemicals down 2 percent
“The key takeaway here is that our franchise diversity is vital to sustained revenue growth,” Davidson said. “In a tough economy, our less cyclical businesses — such as Agriculture and Energy — can lead us to greater profitability.”
Overnite Corporation
Overnite Corporation reported a 15 percent increase in second quarter operating income of $21.0 million, compared to $18.2 million in 2002. Operating revenue was up 10 percent to $372.0 million from $337.1 million last year. Overnite’s operating ratio was 94.4 percent compared to 94.6 percent.
Looking Forward
“We are cautiously upbeat about the second half of the year,” Davidson said. “One cloud on the horizon, however, continues to be energy prices. Diesel fuel and natural gas prices have remained stubbornly high, affecting our customers’ businesses and our cost structure, while creating a drag on the overall economy. We remain focused on running a quality, profitable Company and, with help from a little stronger economy, we’re positioned for growth.”
Union Pacific Corporation is one of America’s leading transportation companies. Its principal operating company, Union Pacific Railroad, is the largest railroad in North America, covering 23 states across the western two-thirds of the United States. A strong focus on quality and a strategically advantageous route structure enable the company to serve customers in critical and fast growing markets. It is a leading carrier of low-sulfur coal used in electrical power generation and has broad coverage of the large chemical-producing areas along the Gulf Coast. With competitive long-haul routes between all major West Coast ports and eastern gateways, and as the only railroad to serve all six gateways to Mexico, Union Pacific has the premier rail franchise in North America. The Corporation’s trucking operations include Overnite Corporation which owns its less-than-truckload carriers, Overnite Transportation and Motor Cargo.