(Union Pacific issued the following on January 24.)
OMAHA, Neb. — Union Pacific Corporation today reported 2007 fourth quarter net income of $491 million, or $1.86 per diluted share, compared to $485 million, or $1.78 per diluted share in the fourth quarter of 2006.
“The drivers of our quarterly performance were revenue growth on flat volume and improved operational efficiency,” said Jim Young, Chairman and Chief Executive Officer. “Despite record-high diesel fuel prices and winter weather challenges, we turned in a solid fourth quarter performance to post another record year for our shareholders and improved service for our customers.”
2007 Fourth Quarter Summary
In the fourth quarter of 2007, Union Pacific reported operating income of $864 million compared to $810 million in fourth quarter 2006, a 7 percent improvement.
* Operating ratio improved to 79.4 percent versus 79.6 percent in 2006.
* The Company’s commodity revenue grew 6 percent in 2007 to a fourth quarter best of $4.0 billion. All six business groups posted record fourth quarter revenue, and Agricultural revenue set an all-time mark. The main component of the growth was a 6 percent increase in average revenue per car (ARC), which reached an all-time quarterly record of $1,638 per car in the fourth quarter 2007, driven primarily by yield gains.
* Business volumes in fourth quarter 2007, as measured by total revenue carloads, were flat at 2.4 million.
* The Railroad’s 2007 average quarterly fuel price, including transportation and taxes, was up 34 percent to $2.59 per gallon compared to $1.94 in 2006.
* The Company’s fuel consumption rate, as measured by gallons per thousand gross ton-miles, was a fourth quarter-best rate of 1.25 versus 1.27 in the fourth quarter 2006.
* The Company repurchased nearly 2.4 million common shares at an average share price of $127.35 in the fourth quarter of 2007.
Fourth Quarter 2007 Commodity Revenue Summary versus 2006
* Chemicals up 12 percent
* Energy up 8 percent
* Agricultural up 7 percent
* Automotive and Intermodal each up 4 percent
* Industrial Products up 1 percent
2007 Full Year Summary
“In 2007, we were able to achieve a Company best 79.3 percent operating ratio, while posting best-ever customer satisfaction marks,” Young said. “We operated our network more safely and efficiently, while improving our return on invested capital.”
Full year 2007 net income was $1.86 billion, or $6.91 per diluted share, versus $1.6 billion, or $5.91 per diluted share reported in 2006.
Railroad commodity revenue totaled a record $15.5 billion in 2007, a 4 percent increase compared with 2006. Five of the six business groups set all-time revenue records in 2007. The main driver of this growth was a 6 percent increase in ARC to a record $1,594 per car, driven primarily by yield gains.
* Operating ratio improved 2.2 points to 79.3 percent in 2007 versus 81.5 percent in 2006.
* Business volumes in 2007, as measured by total revenue carloads, decreased 1 percent to 9.7 million.
* Operating income was a record $3.4 billion in 2007, a 17 percent increase from $2.9 billion in 2006.
* The Railroad’s average yearly fuel price was $2.24 per gallon in 2007 compared to $2.06 in 2006, a 9 percent increase.
* The Company’s fuel consumption rate was a full-year best at 1.26 versus 1.28 in 2006.
* The Company repurchased more than 12.6 million common shares at an average share price of $115.44 in 2007. This represents 63 percent of the 20 million share repurchase program authorized in January 2007.
2008 Outlook
“We see both challenges and opportunities ahead in 2008,” Young said. “Although external factors such as the U.S. economy and high fuel prices will challenge us, Union Pacific employees have created positive momentum for our Company that will lead to further improvements in operational efficiency and customer service. Overall, we remain optimistic that our superior franchise will enable us to overcome economic weakness and post another record year in 2008.”
Union Pacific Corporation owns 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 major gateways to Mexico, Union Pacific has the premier rail franchise in North America.