Union Pacific Corp. said revenue stayed about flat in the first
quarter, as the company struggled to "run an efficient operation"
in the face of a 2% drop in volume.
Shares, which have been down about 7% this year, fell 2.4% in
premarket trading as results missed expectations.
"While we took actions during the quarter to adjust for the
volume decline, we did not run an efficient operation," Chief
Executive Lance Fritz said. Declines in coal, industrial products,
intermodal and chemicals offset growth in the automotive and
agricultural segments.
Freight revenue fell 1% as well.
Mr. Fritz added, however, that the company benefited from
pricing gains. In February, Union Pacific named Mr. Fritz, formerly
chief operating officer, as the railroad company's chief executive,
succeeding Jack Koraleski, whose retirement will start nearly two
years later than planned.
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. Average
quarterly diesel fuel prices fell 38% in the latest quarter.
While shipping crude oil isn't a big part of Union Pacific's
business, rail congestion has been an issue for the whole
sector.
Overall, Union Pacific reported a profit of $1.15 billion, or
$1.30 a share, up from $1.09 billion, or $1.19 a share, a year
earlier.
Revenue edged down slightly to $5.61 billion from $5.64
billion.
Analysts polled by Thomson Reuters expected per-share profit of
$1.37 and revenue of $5.7 billion.
Write to Angela Chen at angela.chen@dowjones.com
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