Rail transportation provider Union Pacific Corp. (UNP: Quote) reported Thursday a profit for the fourth quarter that increased 7 percent from last year, reflecting improved freight revenues amid pricing gains and improved fuel surcharge recovery.
Earnings per share topped analysts’ expectations, while quarterly revenues missed their estimates by a whisker. The company also warned that it expects seeing many of the same challenges faced last year going forward.
“Our diverse portfolio of business, solid core pricing gains, and efficient network operations drove these results despite significantly weaker coal and grain markets. Although it was a challenging year on many fronts, 2012 was Union Pacific’s most profitable year in our 150-year history,” President and CEO Jack Koraleski said in a statement.
The Omaha, Nebraska-based 150-year-old operator of the largest railroad in North America reported net income of $1.04 billion or $2.19 per share for the fourth quarter, higher than $964 million or $1.99 per share in the prior-year quarter.
On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $2.16 per share for the fourth quarter. Analysts’ estimates typically exclude special items.
Total operating revenues grew 3 percent to $5.25 billion from $5.11 billion in the same quarter last year, but missed twenty-one Wall Street analysts’ consensus estimate of $5.31 billion by a whisker.
The company noted that four of its six business groups reported volume growth, and four reported freight revenue growth.
Quarterly freight revenue increased 2 percent to $4.93 billion from last year, mainly driven by core pricing gains and fuel surcharge recoveries.
Volume growth at automotive, chemicals, and intermodal was more than offset by declines in shipments of coal and agricultural products. Volumes for industrial products were flat with last year.
Business volumes, as measured by total revenue carloads, decreased 2 percent to 2.24 million carloads from last year. Average revenue per car load also increased 5 percent to $2,200 from last year.
The company also reported a 1 point improvement in customer satisfaction index to 93 from last year and was the best-ever fourth-quarter record.
Operating ratio for the quarter improved 1.2 percentage points to a fourth-quarter record of 67.1 percent amid pricing gains and improved fuel surcharge recovery.
Operating income for the quarter increased 7 percent to $1.73 billion from the prior-year quarter. Total operating expenses were $3.53 billion, up only 1 percent from the year-ago quarter, with fuel expenses declining 2 percent to $920million from last year.
Average diesel fuel price for the fourth quarter increased 3 percent to $3.25 per gallon from $3.16 per gallon in the year-ago quarter.
For fiscal 2012, the company reported net income of $3.94 billion or $8.27 per share, higher than $3.29 billion or $6.72 per diluted share in the year ago. Operating revenues for the full year grew 7 percent to $20.93 billion from the previous year.
Street was looking for full-year 2012 earnings of $8.25 per share on annual revenues of $20.99 billion.
“For 2013, we’re expecting to see many of the same challenges we faced last year. We’ll also be watching to see what happens in Washington and how it impacts potential economic growth. That said, we successfully navigated through the complexities of 2012, and we’ll continue to follow that same strategy going forward,” Koraleski added.
In Thursday’s regular trading session, UNP is currently trading at $134.57, down $0.78 or 0.58% on a volume of 0.69 million shares.
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by RTT Staff Writer
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