Bloomberg News

Union Pacific Profit Tops Estimates as Auto Volumes Rise

July 19, 2012

Union Pacific Corp. (UNP:US), the biggest North American railroad, posted second-quarter profit that topped analysts’ estimates as automotive and chemical shipments increased.

Net income (UNP:US) advanced 28 percent to $1 billion, or $2.10 a share, from $785 million, or $1.59, a year earlier, the Omaha, Nebraska-based company said today in a statement. The average (UNP:US) of 26 estimates compiled by Bloomberg was $1.97.

Union Pacific benefited from gains of 15 percent in automotive shipments and 12 percent in chemical cargoes, which include material used in hydraulic fracturing for natural gas. The railroad overcame a drop of 17 percent in volumes for coal, its biggest freight category, amid low prices for natural gas. Prices for gas have dropped because of the increased supply from so-called fracking.

“It was a very, very strong quarter,” Brad Delco, a Little Rock, Arkansas-based analyst with Stephens Inc., said in a phone interview. “Based on where their network is located around the Gulf, they have one of the strongest chemical networks and so combined low natural gas prices likely is driving a lot of activity in the chemical business.”

“Volume growth across many of our market sectors offset the 17 percent decline in coal volumes,” Chief Executive Officer Jack Koraleski said in the statement. “The net result was our best-ever quarter by nearly every financial measure.”

Sales gained (UNP:US) 7.5 percent to $5.22 billion, in line with analysts’ estimates. Revenue a year earlier was $4.86 billion.

Union Pacific climbed 2 percent to $120.98 at 8:46 a.m., before the start of regular trading in New York. The shares previously gained 12 percent this year.

To contact the reporter on this story: Heather Perlberg in New York at hperlberg@bloomberg.net

To contact the editor responsible for this story: James Langford at jlangford2@bloomberg.net


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Companies Mentioned

  • UNP
    (Union Pacific Corp)
    • $186.31 USD
    • -1.84
    • -0.99%
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