(The following story by Mike Barris and Dee Patney appeared on the Wall Street Journal website on July 19.)
NEW YORK — Union Pacific Corp., encountering bad weather that affected shipping, Thursday posted a 14% jump in second-quarter profit as commodity revenue rose, and its chief executive forecast strong financial results for the second half of the year.
The largest U.S. railroad in terms of miles of mainline track saw quarterly earnings rise to $446 million, or $1.65 a share, from $390 million, or $1.44 a share, a year ago. Revenue increased 3.1% to $4.05 billion. Analysts polled by Thomson Financial forecast, on average, earnings of $1.62 a share.
Second-quarter carloads for the Omaha, Neb., company fell 3% from a year ago to $2.4 million. Severe weather in the Midwest, a softer housing market and decreased auto sales all contributed to the decline.
Four of the company’s six business groups posted commodity-revenue increases. Agricultural commodity revenue increased 6.9% to $604 million. Energy commodity revenue increased 3.8% to $761 million. Revenue from chemicals rose 7.6% to $578 million. Industrial-product revenue declined 0.9% to $815 million. And automotive revenue slipped 0.3% to $389 million. Intermodal revenue, or sales from the movement of freight by two or more modes of transportation, was up 3.3% to $718 million.
Chairman and Chief Executive Jim Young said that while “the economic outlook remains uncertain,” the company’s “continued focus on yield and productivity improvements should drive better service for our customers and strong financial results for our shareholders in the second half of 2007.”
On Tuesday, major competitor CSX reported a 17% decline in second-quarter earnings from a year earlier, when the company realized a gain from insurance recoveries related to Hurricane Katrina. Its results were helped by strong pricing, but partly offset by a decline in volume. Norfolk Southern Corp. and Burlington Northern Santa Fe Corp. are scheduled to report earnings next week.