Fuel Prices, Storms Hurt Union Pacific
Union Pacific Corp. said Thursday that profit fell 22%, its fifth consecutive quarterly decline, as higher fuel prices and damage from West Coast storms pushed up costs.
First-quarter net income dropped to $128 million, or 48 cents a share, from $165 million, or 63 cents, a year earlier, the Omaha-based company said. Sales rose 9% to $3.15 billion, helped by rate increases.
Union Pacific’s costs increased 10% to $2.84 billion, including $539 million for fuel. The storms cut profit by $34 million, or 13 cents a share, the company said. Union Pacific’s quarterly earnings began to decline when the railroad ran short of train crews as economic growth boosted business.
Richard Davidson, UP’s chief executive, said second-quarter earnings would be 75 cents to 85 cents a share, above the average estimate of 72 cents in a Thomson First Call analyst survey, primarily because of price increases. The railroad is recovering 70% of its fuel-cost increase through a surcharge, he said.
The first-quarter profit exceeded the average estimate of 47 cents a share by analysts in a Thomson First Call survey.
Shares of Union Pacific rose $1.98, or 3.1%, to $65.31 on the New York Stock Exchange.
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