(The following story by Dan Piller was published in the January 23 issue of the Fort Worth Star-Telegram.)
FORT WORTH, Texas — Union Pacific Corp. reported record profits for the fourth quarter and full year of 2002, but cautioned that higher fuel costs and restructuring expenses could cut first-quarter profits.
The Omaha, Neb.-based railroad, which operates a major classification yard in Fort worth, earned $378 million in the fourth quarter, up from $275 million in the 2001 fourth quarter.
Per-share quarterly profits rose from $1.06 in 2001 to $1.41 in the most recent quarter. A $43 million from a land sale in California improved the 2002 results.
For all of 2002, Union Pacific’s net income rose by 39 percent to $1.3 billion, up from $966 million in 2001. Per-share earnings rose from $3.77 per share in 2001 to $5.05 per share last year.
Chairman Dick Davidson described 2002 as a “remarkable year for Union Pacific.” A 10 percent increase in automobile shipments and an 8 percent rise in agricultural products bolstered the railroad.
But Davidson and his executives cautioned that higher fuel costs could cut first-quarter profits. The railroad will also book severance costs from the planned layoff of up to 400 management positions that will take place next year.
Union Pacific President Ike Evans noted that diesel fuel costs were higher in recent weeks and said “earnings growth seems unlikely in the first quarter.”
Union Pacific stock closed down $2.39 per share in trading Wednesday at $57.11.
The layoffs had been announced earlier, but the railroad hasn’t specified where most of the job reductions could occur.
Evans also told investors and media that Union Pacific expects to cut some jobs as it employs more remote-controlled locomotives in its classification yards.
The railroad won an arbitration decision recently in a dispute with the locomotive engineers union over use of the remote-controlled units, which are operated by workers on the ground using electronic devices.
Union Pacific provides railroad services to 23 states in the western two-thirds of the United States. It is the nation’s largest railroad carrier.