OMAHA, Neb. – Union Pacific said Thursday that its third-quarter profit climbed 15 per cent because price increases and more automotive and chemical shipments helped the railroad offset a 12 per cent drop in coal shipments.
The railroad reported $1 billion in net income, or $2.19 per share. That’s up from $904 million, or $1.85 per share, a year ago.
Union Pacific, based in Omaha, Neb., said Thursday that revenue grew 5 per cent to $5.34 billion from last year’s $5.1 billion.
Analysts surveyed by FactSet expected Union Pacific to report earnings per share of $2.18 on sales of $5.38 billion.
Declining coal volumes have been a challenge for the major freight railroads all year because of last year’s mild winter and relatively low natural gas prices. Union Pacific says its total shipment volume declined only slightly because of increases in automotive, chemical and intermodal shipments.
Chemical shipments grew 18 per cent to lead all sectors of Union Pacific’s business. That sector includes the crude oil shipments that have been an important growth area for the railroad as more oil is mined from shale deposits.
Automotive shipments grew 13 per cent as more Americans replaced aging vehicles with new ones.
Union Pacific CEO Jack Koraleski said the railroad is working to respond to market conditions, but it’s difficult to predict exactly what the next quarter will bring.
“As we look out over the next several months, the political and financial challenges in the U.S. and abroad have increased economic uncertainty,” Koraleski said. “In this environment, we’ll continue to be agile as we were in the third quarter.”
Union Pacific Executive Vice-President Eric Butler said the railroad doesn’t expect much economic growth in the last three months of 2012, and the economy could even weaken a bit.
“We expect the economy to at best hold steady,” Butler said.
Railroad results are considered an indicator of the health of the economy. That’s because the carloads of products and raw materials railroads carry can tell investors how other businesses are doing.
Union Pacific operates 32,400 miles of track in 23 states from the Midwest to the West and Gulf coasts.
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Union Pacific Corp.: www.up.com