WASHINGTON (dpa-AFX) - Rail transportation provider Union Pacific Corp. (UNP) reported Thursday a record quarter profit that increased 17 percent from last year, reflecting improved freight revenues amid volume growth and core pricing gains.
Earnings per share matched analysts' expectations, while quarterly revenues topped their estimates by a whisker.
Results from the largest railroads are considered a bellwether of the broader economy - the rise in shipping volumes suggest the U.S. recovery is picking up steam after a rough winter.
'Union Pacific achieved record quarterly financial results, leveraging the strengths of our diverse franchise to handle strong demand in the face of challenging operating conditions,' President and CEO Jack Koraleski said in a statement.
The Omaha, Nebraska-based 151-year-old operator of the largest railroad in North America reported net income of $1.29 billion or $1.43 per share for the second quarter, higher than $1.11 billion or $1.18 per share in the prior-year quarter.
On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $1.43 per share for the quarter. Analysts' estimates typically exclude special items.
Total operating revenues for the quarter grew 10 percent to $6.02 billion from $5.47 billion in the same quarter last year, and topped eighteen Wall Street analysts' consensus estimate of $6.0 billion by a whisker.
Freight revenues increased 10 percent to $5.66 billion from $5.15 billion in the year-ago quarter, with all six business groups reporting revenue growth. The company added that five of its six business groups also reported volume growth.
Business volumes, as measured by total revenue carloads, increased 8 percent from last year to 2.43 million carloads. Average revenue per car load also edged up 1 percent to $2,329 from last year.
Volume growth at agricultural products, intermodal, industrial products, automotive and coal was partially offset by a small 1 percent decline in shipments of chemicals as a reduction in crude oil shipments more than offset growth in base chemicals.
Operating ratio for the quarter improved 2.2 percentage points to a quarterly record of 63.5 percent from last year. It was also 1.3 points better than the previous all-time quarterly record set in the third quarter 2013.
'We were pleased to see strong volume growth which, combined with solid core pricing, drove more than a two-point improvement in our Operating Ratio to a record 63.5 percent for the quarter,' Koraleski noted.
Operating income for the quarter increased 17 percent to $2.20 billion from the prior-year quarter. Total operating expenses were $3.82 billion, up 6 percent from the year-ago quarter, with fuel expenses increasing 7 percent to $923 million from last year.
Average diesel fuel price for the second quarter remained flat with last year at $3.10 per gallon.
'We are optimistic about the second half of the year. As always, we are closely monitoring the economic landscape, along with the major drivers across all of our business segments, including the potential impact of weather on grain and coal. As the economy gradually continues to improve, the power of our diverse franchise provides business growth opportunities in all of our commodity groups,' Koraleski added.
In Thursday's regular trading session, UNP is currently trading at $101.87, down $0.64 or 0.62% on a volume of 0.99 million shares. In the past 52-week period, the stock has been trading in a range of $74.61 to $103.25.
Copyright RTT News/dpa-AFX