JOSH FUNK
AP Business Writer
OMAHA, Neb. (AP) — Union Pacific Corp. delivered a 19 percent increase in its third-quarter profit as the railroad hauled 7 percent more freight and increased rates.
“We are optimistic about the remainder of the year,” CEO Jack Koraleski said. “Assuming the economy and weather cooperate, we are well positioned to finish up the year with record results.”
The Omaha, Nebraska-based railroad said Thursday that it earned $1.37 billion, or $1.53 per share, for the quarter ended Sept. 30. That’s up from $1.15 billion, or $1.24 per share, a year ago.
Union Pacific’s revenue climbed 11 percent to $6.18 billion from $5.57 billion.
Analysts surveyed by FactSet expected Union Pacific to report earnings per share of $1.51 on revenue of $6.10 billion.
Union Pacific reported the most growth in shipments of intermodal shipping containers, industrial products and agricultural goods.
Coal was the only sector that didn’t grow in the quarter but after the decrease in coal demand in recent years, reporting flat coal volumes and a 2 percent increase in revenue was positive.
Edward Jones analyst Logan Purk said Union Pacific again delivered impressive results while controlling costs well.
“Union Pacific has shown they can do much more with the type of growth they’re seeing,” Purk said.
Citi Investment Research analyst Christian Wetherbee said the results demonstrate the strength of Union Pacific’s operations especially with the large number of weather disruptions.
“The quarter was strong from top to bottom,” Wetherbee said.
Investors have been talking about the possibility of railroad mergers because Canadian Pacific and CSX railroads disclosed they held preliminary talks about combining before abandoning the idea.
But Koraleski said he doesn’t think merging any of the big railroads makes sense because it wouldn’t necessarily improve service and could run into regulatory problems.
“I am not convinced that merging is the way you solve service issues in this industry,” Koraleski said. “Particularly right now, I don’t think mergers make sense.”
But if other major railroads did move forward with a merger, Koraleski said Union Pacific would have to reevaluate the situation.
Union Pacific shares rose $4.66, or 4.4 percent, to $111.52 in afternoon trading.
Its shares have risen 27 percent since the beginning of the year, while the Standard & Poor’s 500 index has risen slightly more than 4 percent. The stock has increased 38 percent in the last 12 months.
Union Pacific operates 32,400 miles of track in 23 states from the Midwest to the West and Gulf coasts.
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Online:
Union Pacific Corp.: www.up.com
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