(Union Pacific issued the following news release on January 25.)
OMAHA, Neb. — Union Pacific Corporation today reported 2006 fourth quarter net income of $485 million, or $1.78 per diluted share, compared to $296 million, or $1.10 per diluted share in the fourth quarter of 2005.
“Our key accomplishments for the fourth quarter were the nearly six-point improvement in operating ratio and best-ever operating income,” said Jim Young, President and Chief Executive Officer. “Overall, we turned in a great fourth quarter performance – a strong finish to a record year. In 2006, we significantly improved our return on invested capital and laid the foundation for further operational and financial improvement, benefiting both our customers and our shareholders.”
Fourth Quarter 2006 Highlights
* Record fourth quarter 2006 commodity revenue totaled $3.8 billion, up 9 percent.
* Operating income grew 52 percent to an all time quarterly record of $810 million.
* Fourth quarter operating ratio of 79.6 percent was a 5.7 point improvement versus fourth quarter 2005 and a quarterly best.
Full Year 2006 Highlights
* Full year commodity revenue grew 15 percent to an all time record of $14.9 billion.
* Operating income of $2.9 billion was an all time record, up 61 percent.
* Full year operating ratio improved 5.3 points versus 2005 to 81.5 percent.
2006 Fourth Quarter Summary
In the fourth quarter of 2006, Union Pacific Corporation reported operating income of $810 million compared to $533 million in fourth quarter 2005, a 52 percent improvement.
* Operating ratio improved to 79.6 percent versus 85.3 percent in 2005.
* The Company’s commodity revenue grew nine percent to a fourth quarter best $3.8 billion, with five of the six business groups posting increases for the quarter. The main component of the growth was an eight percent increase in average revenue per car (ARC). Growth in ARC resulted from yield improvements and the Company’s fuel surcharge programs.
* Business volumes, as measured by total carloads, grew one percent to 2.4 million.
* The Company’s fuel consumption rate, as measured by gallons per thousand gross ton-miles, was a fourth quarter best rate of 1.27 versus 1.30 in the fourth quarter 2005.
* The Railroad’s average quarterly fuel price including transportation and taxes was $1.94 compared to $2.08 per gallon in 2005.
* Quarterly average train speed, as reported to the Association of American Railroads, was 22 mph, up 1.5 mph from the fourth quarter of 2005. Quarterly terminal dwell time improved 13 percent to 25.9 hours versus 29.8 hours reported in the fourth quarter of 2005.
Fourth Quarter Commodity Revenue Summary versus 2005
* Agricultural and Energy each up 20 percent
* Chemicals up 9 percent
* Intermodal up 4 percent
* Automotive up 2 percent
* Industrial Products was flat
2006 Full Year Summary
“2006 was a great year for Union Pacific,” Young said. “Our network management initiatives and capacity expansion programs helped us move record volumes for our customers.”
Full year 2006 net income was $1.6 billion or $5.91 per diluted share, versus $1.0 billion, or $3.85 per diluted share reported in 2005. The 2005 full year results included a non-cash income tax expense reduction of $118 million after-tax, or $.44 per diluted share. The comparison of 2006 and 2005 earnings, excluding the tax item, would be $5.91 per diluted share versus $3.41 per diluted share, a 73 percent increase.
Railroad commodity revenue totaled a record $14.9 billion, a 15 percent increase. The main driver of this growth was an 11 percent increase in ARC to $1,509. Growth in ARC resulted from yield improvements and the Company’s fuel surcharge programs.
* Business volumes, as measured by total carloads, increased three percent to a record level of 9.9 million.
* Operating income was a record $2.9 billion, a 61 percent increase from $1.8 billion in 2005.
* Operating ratio improved 5.3 points to 81.5 percent versus 86.8 percent in 2005.
* The Company’s fuel consumption rate was a full year best at 1.28 versus 1.30 in 2005.
* The Railroad’s average yearly fuel price was $2.06 compared to $1.77 per gallon in 2005, a 16 percent increase.
* Average system speed, as reported to the Association of American Railroads, was 21.4, up 0.3 mph compared to 2005. Average terminal dwell time improved 5 percent versus 2005, to 27.2 hours from 28.7 hours.
2007 Outlook
“While economic indicators are mixed, we are optimistic about what we see ahead for Union Pacific in 2007,” Young said.