By Tess Stynes
Union Pacific Corp. said its fourth-quarter earnings rose 22% as
the railroad operator continued to benefit from rail freight demand
that has powered the sector.
Shares rose 2.3% to $116.99 in recent premarket trading as the
results beat expectations. Through Wednesday's close, the stock has
risen 36% in the past 12 months.
Analysts have been expecting nearly all freight-rail companies
to post strong results despite a steep decline in prices for crude
oil--one of the fastest-growing parts of the rail business.
However, some analysts expect freight-rail operators could face
stiffer truck competition as lower fuel prices will trim the price
advantage trains have had over trucks in recent years.
While shipping crude oil isn't a big part of Union Pacific's
business, rail congestion has been an issue for the whole sector.
In its latest earnings report, Union Pacific noted that train speed
had slowed 8% from a year earlier.
"Robust volumes challenged our network for much of the year, and
we remained focused on adding the necessary resources to safely
improve service," Chief Executive Jack Koraleski said Thursday. "We
are encouraged with the progress we are making."
Looking ahead, "Clearly, one of the biggest uncertainties is the
outlook for energy markets, which will bring both challenges and
opportunities," he said.
Overall, Union Pacific reported a profit of $1.4 billion, or
$1.61 a share, up from $1.17 billion, or $1.27 a share, a year
earlier. Revenue increased 9.3% to $6.15 billion.
Analysts polled by Thomson Reuters expected per-share profit of
$1.51 and revenue of $6.1 billion.
Total revenue carloads--or volume--improved 6%, led by
industrial products, which climbed 15% and coal, which grew 9%.
Intermodal volume increased 11%.
Average quarterly diesel fuel prices fell 14%.
Last week, CSX Corp. reported that fourth-quarter earnings rose
15% as the freight railroad operator continued to benefit from
strong freight demand. Kansas City Southern is set to release its
results Friday and Norfolk Southern Corp. on Monday.
Write to Tess Stynes at tess.stynes@wsj.com
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