OMAHA, Neb. (AP) — Union Pacific's first-quarter profit surged 11 percent as higher shipping rates offset weak demand for coal. The railroad expects shipping volume to improve later this year.
The Omaha, Neb.,-based railroad said Thursday that it generated net income of $957 million, or $2.03 per share, in the quarter. That's up from $863 million, or $1.79 per share, a year earlier. Revenue rose to $5.29 billion revenue from $5.1 billion revenue.
The results beat Wall Street's expectations. Analysts surveyed by FactSet expected earnings per share of $1.96 on revenue of $5.22 billion. Union Pacific shares gained $6.29, or 4.6 percent, to $143.23 in afternoon trading.
Over the rest of the year Union Pacific officials say they're expecting a slight increase in shipping volume as long as the economy continues growing slowly and normal weather patterns return.
"I love what I'm seeing at the moment, but I'm also cautious about whatever might cause consumer confidence to falter," Union Pacific CEO Jack Koraleski said in an interview with The Associated Press.
Koraleski said he's encouraged by the improvement in the housing and automotive markets. Builders have been starting houses and apartments at the fastest pace in 4 ½ years. And March was the best month for auto sales since August 2007.
The CEO said he's even more excited about the fact that several European companies have contacted Union Pacific about looking at possible manufacturing sites along railroad lines, including a new steel plant in Louisiana.
In the first quarter, the railroad's total shipping volume declined 2 percent because of a drop in coal and agricultural shipments.
Union Pacific hauled 19 percent fewer carloads of coal in the first quarter. Last year's drought caused a 9 percent decline in agricultural shipments. But strong growth in crude oil shipments and intermodal containers, and a core rate increase of 4 percent on most shipments made up for that.
Coal demand has suffered over the past couple of years as cheap natural gas and concerns about environmental regulations prompted many utilities to switch to using natural gas.
But Union Pacific officials say coal shipments appear to have bottomed out last year, so the railroad should see coal volumes improve through the rest of the year as long as the summer is hot.
Union Pacific operates 32,400 miles of track in 23 states from the Midwest to the West and Gulf coasts.